Small Business Debts Surge

The debts of small businesses have surpassed W800 trillion as a result of the coronavirus lockdown, the Bank of Korea said Wednesday (US$1=W1,130).

Their combined bank-loan balance stood at a record W803.5 trillion as of the end of December, up a whopping W118.6 trillion on-year.

Out of 5.42 million small businesses, 2.38 million have an average debt of W337.6 million each. Their combined debt grew by W50-60 trillion a year between 2013 and 2016 but surged by W68 trillion in 2017 and 2019.

Small business owners account for more than a quarter of all employed people in the country, so a sharp increase in their debt puts a serious burden on the country's economy.

The proportion of debtors who are at risk of default also increased sharply by 76 percent to 192,000 households. Debtors are considered at risk if their debt principal repayments surpass 40 percent of their income and of their liabilities exceed their assets.