SME Loan Delinquency Rate Hits Highest in 11 Years
Rising delinquency rates among small and medium-sized enterprises are worsening cash flow shortages and slowing economic conditions are increasing financial burdens. Quickly check the causes of the worsening amid raw material, high exchange rate, and interest rate pressures.
According to the Financial Supervisory Service, as of the end of last May, the delinquency rate on bank loans for small and mediumsized enterprises stood at 1.00%, up 0.10 percentage points from the previous month. It is the first time in 11 years that the delinquency rate for small and mediumsized enterprises has exceeded 1%, since May 2015.
The delinquency rates of both small corporations and sole proprietors rose, and the delinquency rate for large companies also edged up slightly. The overall delinquency rate, combining businesses and households, also rose to 0.67%, marking its highest level since October 2016.
The article analyzed that, amid prolonged weakness in domestic demand, rising raw material prices, a weak won, and interest rate burdens are worsening the funding conditions of small and mediumsized enterprises. A survey by the Korea Federation of Small and Medium Businesses also found that many companies said business conditions had worsened compared with the second half of last year.