[Alpha Biz=(Chicago) Reporter Kim Jisun] The balance of loans extended to small and medium-sized companies in the banking sector is set to surpass KRW 1,000 trillion for the first time in history. The number of small and medium-sized companies that have filed for bankruptcy has also increased to a record high.

Along with the fact that lending rates for small and medium-sized companies remain at an average high interest rate of 5% for more than a year, the economic slowdown caused by high prices and testicles is cited as an accelerating factor.

According to the Bank of Korea on the 5th, the balance of loans extended to small and medium-sized enterprises by deposit banks as of the end of October this year is 998 trillion won, up 3.8 trillion won from the end of the previous month. This is the largest ever. Although the figures have yet to be released at the end of November, it is certain that the figure will surpass 1,000 trillion won considering the recent increase.

In particular, the balance of loans to small and medium-sized enterprises has surged since the COVID-19 incident. The figure at the end of October this year increased by 283 trillion won compared to four years ago (end of October 2019) before COVID-19. The increase is nearly double that of 155 trillion won in the previous four years.

The loan rate is also high. Deposit banks' lending rates for small and medium-sized enterprises continued to rise for the second straight month to an average of 5.35 percent based on new handling amount in October. Loan rates for small and medium-sized companies rose from 2.89 percent in December 2020, the first year of COVID-19, to 3.37 percent in December 2021 and surged to 5.76 percent in December last year. The rate has been above the 5% mark for 13 consecutive months since October last year.

Because of this, the loan interest burden of small and medium-sized companies is not easy. In October this year, 62.1% of new loans by small and medium-sized companies with interest rates of more than 5% accounted for 62.1%. Two years ago, in October 2021, this portion was only 3.0%, but the portion of loans with interest rates of more than 5% has more than doubled in two years.

 

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