Subrogation Payments for Small Business Owners in Gangwon Region More Than Double

This year, the amount of bank debt that small business owners in the Gangwon region were unable to repay and the Gangwon Credit Guarantee Foundation paid on their behalf has more than doubled.

According to data submitted to the National Assembly Public Administration and Security Committee member Yang Bu-nam from the Korea Credit Guarantee Fund on the 23rd, the amount of subrogation payments in Gangwon Province from January to July this year was tallied at 56.7 billion won. This is a 2.2-fold increase from 25.6 billion won last year, and the second largest increase among the 17 cities and provinces in the country, following Sejong (4-fold).

Subrogation is when a local credit union, which guarantees loans to small business owners from banks, pays off loans that small business owners are unable to repay.

The amount of subrogation in the province decreased by about 600 million won from 12.1 billion won in 2021 to 11.5 billion won in 2022, but then jumped more than fourfold to 47.5 billion won last year.

The cumulative number of subrogation cases in July this year also increased by 144.87% compared to the same period last year, reaching 3,531 cases.

The reason the scale of subrogation has increased so drastically is that small business owners have significantly increased their loans while experiencing the so-called “three highs” crisis of high interest rates, high prices, and high exchange rates since COVID-19, but have not yet recovered their ability to repay them.

Rep. Yang Bu-nam emphasized, “The difficulties faced by small business owners are further slowing down the economy and having a negative impact on the local economy,” and “The government should consider policy measures such as bold fiscal investment.”