More than 150,000 small businesses have taken out high-interest loans from small savings banks, or multiple loans from credit card companies and other financial institutions, according to a recent study.
The number of small businesses who took out high-interest loans increased by 50,000 over the last three years.
According to data Liberty Korea Party lawmaker Choo Kyung-ho obtained from the Bank of Korea, 1.14 million Koreans had taken out high-interest loans as of March of this year.
The number of small-business owners in that group jumped from 98,000 in December 2014 to 148,000 in March this year, an increase of 51 percent compared to the overall increase of 10 percent.
The proportion of small business owners among debtors at commercial banks has also grown. The BOK said earlier this month that loans they took out from commercial banks reached W304.6 trillion in late July, up W2.5 trillion from just a month earlier (US$1=W1,117).
If U.S. interest rate hikes push up Korean rates during the second half of this year, a growing number of small businesses could go bankrupt, dealing a severe blow to the economy.
Choo said, "Small businesses have to shoulder increased cost burdens due to the sharp minimum wage hike and now have to deal with rising interest payments. We need to ease regulations and come up with measures to help small businesses if we want to revive the economy."