Biz Plus Card usage rises from 114 billion won to 172 billion won

Banks expand debt restructuring, guarantees and rate relief for small businesses

Gyeongdong Market in Dongdaemun-gu, Seoul, sits quiet. [Herald DB]
Gyeongdong Market in Dongdaemun-gu, Seoul, sits quiet. [Herald DB]

Small business owners are seeing sales grow, but costs are rising even faster, squeezing profit margins and their ability to repay debt at the same time. Against that backdrop, spending on a credit card designed specifically to fund small business operations has surged — and banks are responding by broadening their support beyond simple lending to include debt restructuring, interest-rate relief, guarantees and management consulting.

As of the end of August, the Industrial Bank of Korea's small-business credit card, the Biz Plus Card, had been issued 20,867 times and had accumulated total spending of 366.7 billion won ($268 million), according to financial industry data released Thursday.

The pace of spending growth was particularly striking. Spending totaled 114 billion won in the second half of last year, then climbed to 172 billion won in the first half of this year — a gain of 58 billion won, or about 51 percent. An additional 80.7 billion won was spent in July and August alone, bringing cumulative spending for the first eight months of this year to 252.7 billion won. That eight-month figure is roughly 2.2 times the total recorded in the six months of last year's second half.

The Biz Plus Card is a credit card for small business owners operated jointly by Industrial Bank of Korea, the Ministry of SMEs and Startups and the Korea Federation of Credit Guarantee Foundations. Backed by guarantees from regional credit guarantee foundations, it allows spending of up to 10 million won, and sole proprietors are exempt from the annual fee. It also offers interest-free installment plans of up to six months and cashback benefits.

Because the card is widely used to cover operating costs, the rise in spending signals that small businesses continue to face persistent funding needs.

The operating environment for small businesses is indeed growing more difficult. According to Korea Credit Data, average sales per small business establishment came to 47.11 million won in the second quarter of this year, up 4.53 percent from a year earlier, but average expenses rose faster, climbing 5.83 percent to 35.22 million won. With costs outpacing revenue, the average profit margin fell to 25.2 percent, down 0.92 percentage points from a year ago.

Overdue loans held by sole proprietors have also grown. Delinquent loan balances for sole proprietors reached 15.2 trillion won in the second quarter, up 1.8 trillion won from 13.4 trillion won in the same period last year. Total outstanding loans to sole proprietors also rose over the same period, from 723.5 trillion won to 735.8 trillion won.

ATM machines at major banks in Seoul. [Yonhap]
ATM machines at major banks in Seoul. [Yonhap]

With both operating costs and debt burdens mounting simultaneously, banks are diversifying the ways they support small business owners.

Woori Bank is helping sole proprietors who are planning to close or have already shut down their businesses convert existing business loans into household loans repayable over a longer period. For small business owners facing temporary cash shortages, the bank offers maturity extensions, loan rollovers, contract renewals and interest-rate reductions through its Soho 119 Plus program. It also runs a separate lending program that provides additional business funding to sole proprietors who have faithfully carried out debt restructuring plans.

Shinhan Bank operates a program that refunds up to 4 percentage points of interest on loans to low-credit sole proprietors carrying rates above 5 percent annually, with the refunded amount automatically applied to reduce the principal.

Hana Bank is providing up to 20 million won in funding through a 300 billion won small-business savings account program run jointly with the Seoul Metropolitan Government and the Seoul Credit Guarantee Foundation, and is covering 50 percent of new loan guarantee fees. In Incheon, the bank has expanded its guarantee program to include small business owners with mid-to-low credit ratings, and is also supporting the adoption of digital equipment such as AI-enabled closed-circuit television cameras, kiosks and QR-code ordering systems.

KB Kookmin Bank runs a non-face-to-face guaranteed loan service through the Korea Federation of Credit Guarantee Foundations' Guarantee Dream app, allowing customers to apply for guarantees, submit documents and complete loan disbursements entirely online. Through Oct. 30, customers who take out a loan via the service will receive a subsidy covering 50 percent of their guarantee fee, up to 300,000 won.

Industrial Bank of Korea is also expanding small business owners' access to financing by offering a non-face-to-face working-capital loan backed by Korea Credit Guarantee Fund guarantees, alongside the Biz Plus Card.

"As the high-interest-rate environment persists, the financial burden on low-credit and vulnerable borrowers has been accumulating," a banking industry official said. "The financial sector is expanding its support beyond simply supplying funds, moving toward improving financial access for these borrowers and helping them maintain a stable financial life."


rim@heraldcorp.com