Korea Expands SME Loan-Transfer Program to Cheaper Terms for Small Businesses
The Financial Services Commission of Korea announced that a program allowing self-employed individuals to transfer existing SME credit loans to more favorable terms will begin on the 18th. The initiative expands a policy first introduced in May 2023 to spur competition and lower borrowers’ interest costs, which had previously covered personal loans and housing-related borrowings but not small business owners.
Under the plan, self-employed borrowers with working capital loans of up to 100 million won from 18 participating banks can switch to a new loan on better terms. The service is delivered through 13 banks’ own apps and five loan comparison platforms, including Naver Pay, Kakao Pay, and Toss, plus two other platforms.
Users can view their current loan and compare it with competing SME credit products from other banks, then select the more favorable option. The service removes limits on transfer windows, loan increases, and maturities to improve accessibility for small businesses. Some loan types are excluded, such as mid-term loans that are not pure credit loans, B2B-related loans, and real estate leasing loans.
The Financial Services Commission estimates the program could move more than 1 trillion won in loans to cheaper products, intensifying competition among lenders and reducing borrowing costs for small business owners.
Banks are expected to respond with transfer-specific preferential-rate products. The commission notes that the service had already been used by about 420,000 people by the end of last year, who saved roughly 1.69 million won per person annually. Overall, the program recorded loan movements totaling about 22.8 trillion won, with an average interest-rate reduction of 1.44 percentage points.
Why this matters beyond Korea: the move highlights how targeted financial-technology tools and policy incentives can lower financing costs for SMEs, a key driver of growth in Korea’s tech, manufacturing, and services sectors. For U.S. partners, cheaper Korean SME credit can support supply chains and collaboration with Korean suppliers and banks, potentially boosting U.S.-Korea trade in areas such as semiconductors, electronics, and other technology-intensive industries. The policy also signals ongoing efforts to deepen financial competition and digital access, which could influence how multinational banks operate in Korea and how cross-border lending and fintech platforms evolve.