Tmon-WeMakePrice victims face loan repayment crunch as grace periods end

Two years after the massive payment settlement failure at Tmon and WeMakePrice, the nightmare for affected small and medium-sized enterprises and small business owners is far from over. The grace periods on emergency policy loans extended to tide them over are now expiring in quick succession, bringing the burden of principal repayment into sharp relief.

According to data submitted to Park Min-gyu, a Democratic Party of Korea lawmaker on the National Assembly's Political Affairs Committee, by the Ministry of SMEs and Startups, the Korea SMEs and Startups Agency and the Korea Small Business and Market Corporation disbursed a combined 146.1 billion won ($106 million) in emergency business stabilization funds to 1,491 small and medium-sized enterprises and small business owners affected by the Tmon-WeMakePrice crisis.

The problem is that the grace periods on those policy loans are now ending, triggering the start of full principal repayment. Grace periods expire for 609 affected firms this month and for another 447 next month — a combined 1,056 firms, or 70.8 percent of all recipients, within just two months. The total funds disbursed to those businesses amount to 111.5 billion won.

The Tmon-WeMakePrice crisis began in the summer of 2024, when the two e-commerce platforms failed to pay out settlement funds to their merchant sellers. Sellers who had already delivered goods or services to consumers were suddenly plunged into a liquidity crisis when the payments never came. The blow fell hardest on smaller merchants and self-employed business owners, who had comparatively little financial cushion to absorb the shock.

The emergency policy loans helped those businesses survive the immediate liquidity crunch, but as time passed, the question of repayment moved to the fore. Companies that have yet to return to normal operations now face the added strain of repaying the principal on those loans.

In response, the government moved to offer additional debt restructuring for affected firms. The Ministry of SMEs and Startups said Tuesday it would introduce a borrower-tailored debt restructuring program to ease the repayment burden on Tmon-WeMakePrice victims. Under the plan, firms keeping up with repayments will be directed to in-house debt restructuring programs run by the Korea SMEs and Startups Agency and the Korea Small Business and Market Corporation, while those that have fallen into arrears will be linked to external restructuring mechanisms such as the Fresh Start Fund.

The Korea SMEs and Startups Agency will offer a "small-amount faithful repayment support" program for firms that have already repaid at least 10 percent of their principal, reducing monthly repayment amounts to 20 percent of the original level for six months. Firms that maintain consistent repayments during that period will be eligible for a one-year extension of their repayment term. Those facing temporary repayment difficulties will also be able to apply for a deferral.

Small business owners using Korea Small Business and Market Corporation policy loans who are current on repayments or no more than 30 days in arrears may have their repayment period extended by up to seven years. Those who have closed their businesses and taken up salaried employment will be eligible for a 0.5 percentage point reduction in their policy loan interest rate if they remain employed for at least one year.

As the two-year mark since the crisis passes, the focus of support for affected firms is shifting from emergency liquidity provision to easing the burden of policy loan repayment. With 70.8 percent of all recipient firms reaching the end of their grace periods in September and October alone, reducing that repayment burden has emerged as the most pressing challenge. The government plans to address it through a combination of repayment deferrals, term extensions and referrals to external debt restructuring programs.

"We will take careful stock of the situation to ensure that businesses hurt by the Tmon-WeMakePrice crisis do not face renewed hardship because of policy loan repayments," said Noh Yong-seok, first vice minister of SMEs and Startups. "We will actively guide and support each firm toward the debt restructuring program that best fits its repayment circumstances, so as to lighten the repayment burden and help them return to normal operations."