South Korea Extends Policy-Loan Repayment for SMEs Amid Won Volatility, Middle East Turmoil

The Korea SMEs and Startups Agency, known as SBA, announced on March 20, 2026, that it will implement a special maturities extension for policy-funded loans to help small and medium-sized enterprises facing difficulties from a weakened won and the ongoing Middle East conflict. The measure was developed in coordination with the Ministry of SMEs and Startups.

Under the plan, eligible borrowers can extend the repayment of principal on policy loans by up to one year. Importantly, the extension will not incur additional interest, and there is no requirement to resume minimum principal payments due during the extended period.

To qualify, firms must have an outstanding balance on SBA policy loans and be experiencing management difficulties caused by the high exchange rate and the Middle East situation. In addition, they must meet either of two criteria: the share of imports for raw materials or products is at least 20% of annual sales, or the company is exporting to the Middle East.

Applications for direct SBA loans must be submitted to SBA directly, while borrowers using agency loans should apply through the lending banks that handle their loans. The window to apply runs through December 31 of this year.

Applicants must also meet several conditions: they may not be in tax arrears or delinquent with local authorities, and they must not be delinquent with any financial institutions, including SBA. The program excludes firms in bankruptcy, rehabilitation, or workout procedures, and it will not apply where guarantor consent is lacking or where a bank’s internal rules deem the borrower ineligible.

For U.S. readers, the policy underscores how Korea’s government-backed liquidity support tools aim to shield small firms from simultaneous shocks—currency volatility and geopolitical disruptions—that could ripple through global supply chains. Korea is a key supplier of electronics, automotive components, and other advanced manufacturing goods used by American companies, so shifts in Korean SME stability can affect pricing, availability, and timing in U.S. markets.

The extension signals ongoing government support to sustain Korea’s small-business ecosystem and manufacturing links at a time of external pressures. By preserving SME liquidity, Seoul hopes to reduce the risk of cascading defaults that could affect broader economic growth and trade with partner economies, including the United States.