Younger self-employed struggle with higher delinquency rates

A self-employed resturant owner prepares food at her restaurant in Seoul, Jan. 12. Newsis

Self-employed people in their 20s and 30s have a higher rate of failing to make repayments on time than older age groups, data showed Monday.

Released by Rep. Yang Kyung-sook of the main opposition Democratic Party of Korea (DPK), the data compiled by NICE Information Service showed the amount of delinquent loans for three months or longer among all self-employed people nationwide increased by nearly 50 percent to 9.08 trillion won from 2022 to 2023.

The overall delinquency rate accordingly moved up to 2.47 percent from 1.69 percent over the cited period.

A Seoul-based crediting rating agency, NICE Information Service assessed the delay in payment was caused by falling profits in the aftermath of the pandemic, high interest rates and other economic risks.

Of all age groups, those in their 20s had the highest delinquency rate at 6.59 percent, followed by those in their 30s at 3.9 percent. The rate got slower for older groups — 3.61 percent for those in their 40s, 2.95 percent in their 50s and 2.51 percent for those in their 60s or older.

“The younger self-employed people tend to be less experienced in finance management and thus have difficulty in paying back loans on time,” the lawmaker said.

According to research by the Seoul Institute, small businesses run by those in their 20s are most likely to close down compared with those in other age groups. For instance, they were 1.26 times more likely to close down compared with ones run by those in their 50s.