Small business owners are saddled with more than twice as much debt as salaried workers, according to a report by the Bank of Korea on Wednesday.
The BOK said small business owners shoulder W95 million (US$1=W1,092) worth of debt per household, compared to W46 million per salaried worker. The credit delinquency rate by small business owners is 1.1 percent, also nearly twice as high among salaried workers (0.6 percent).
The total debt held by small business owners amounts to an estimated W429 trillion and is rising fast. The figure increased 17 percent from January 2011 until March this year. Over the same period, salaried workers saw their debt rise only 9 percent.
"Since the global financial crisis, domestic consumption has been slow, so small businesses' profits shrank and owners needed more funds to cover operations and living costs," a BOK official said.
However, the number of people who set up their own small business continues to grow. As of the end of September this year, there were 5.8 million small business owners, up 300,000 so far this year.
The main reason is the rising number of baby boomers born between 1955 and 1963 who are retiring and opening a shop to make ends meet.
Small business owners account for 23 percent of all employed people in Korea, which is the highest rate in the OECD and second only to Greece.