On the 14th, the Financial Services Commission announced that it will expand the support for the small business and self-employed debt adjustment program, known as the 'Fresh Start Fund,' in September.
On the same day, the Financial Services Commission held a meeting with the Fresh Start Fund agreement institutions to discuss the direction of revising the agreement and to listen to on-site suggestions. This is to quickly implement the government’s announcement last month about expanding the support for the Fresh Start Fund.
Previously, the government decided to increase the principal debt reduction rate through the Fresh Start Fund from the existing 60-80% to 90%. Furthermore, the eligible recipients of the Fresh Start Fund were expanded from 'small business owners and self-employed people operating from April 2020 to November 2024' to those who have operated their businesses until June of this year. In relation to this, the budget reflected in the second supplementary budget is 700 billion won.
The Financial Services Commission plans to designate the next month as a period for gathering focused opinions on the Fresh Start Fund and will operate on-site meetings and an online bulletin board to further identify improvements in the system.
At the meeting, three counselors from the Korea Asset Management Corporation (KAMCO), who meet directly with applicants for the Fresh Start Fund, also attended. They noted that the biggest difficulty reported by debtors recently is the delay in the debt adjustment process, which postpones the signing of agreements.
KAMCO stated that to accelerate the signing of agreements for the Fresh Start Fund, it is necessary to streamline the debt adjustment process and redesign the incentive structure so that creditor financial institutions can cooperate. There were also calls to strengthen support for the 'intermediary-type debt adjustment' provided by the Fresh Start Fund, which adjusts the interest rates and repayment periods of debts without reducing the principal.