The Fresh Start Fund is expanding incentives for faithful repayment and broadening grounds for payment deferrals to help small business owners and the self-employed who have undergone debt adjustment get back on their feet, while also strengthening support linked to employment and re-startup programs. The approach provides additional benefits to borrowers who faithfully fulfill their debt adjustment agreements for a certain period or who pursue employment or a new business after closing their previous one.

■ Up to 10% Additional Reduction of Remaining Debt for Early Repayment After One Year of Faithful Compliance

According to the Fresh Start Fund, if a distressed borrower who has faithfully fulfilled a purchased-type unsecured debt adjustment repayment plan without arrears for more than one year makes an early repayment, they can receive an additional reduction of 5 to 10% of the remaining debt burden, depending on the length of the repayment plan compliance period.

■ Additional Interest Rate Cuts Each Year, Applied for Up to 4 Years, With a Floor of 3.25% Per Annum

An interest rate reduction incentive has also been established for borrowers at risk of default who repay faithfully. For at-risk borrowers using intermediary-type unsecured debt adjustment, each year of faithful repayment will result in an additional rate cut equal to 10% of the initially applied rate. The reduction applies for up to four years, with an interest rate floor of 3.25% per annum.

The '10% reduction' here does not mean lowering the rate by 10 percentage points each year. Rather, it is structured as an additional cut equal to 10% of the rate first applied after the debt adjustment.

■ Childbirth, Parental Leave, and Caring for Family Members With Severe Illness Added as Grounds for Payment Deferral

Grounds for payment deferral have also been expanded for borrowers who face unavoidable circumstances during repayment. Childbirth and parental leave, as well as having a dependent family member with a severe disability or one of the four major serious illnesses, are now included as eligible grounds for deferral.

In addition, borrowers who have faithfully fulfilled their debt adjustment for more than one year without arrears may apply for a payment deferral when urgent circumstances arise, subject to relevant requirements.

■ Completion of Employment or Re-Startup Programs Adds Up to 10 Percentage Points to Principal Reduction Rate

Linkage with programs supporting re-employment and re-startups for closed small businesses and the self-employed has also been strengthened. Starting with training in 2026, the range of employment and startup programs eligible for linkage with principal reduction benefits will be expanded. Distressed borrowers who complete eligible programs can receive an additional principal reduction rate depending on requirements, with the additional reduction of up to 10 percentage points.

Credit recovery support will also be provided to borrowers who have actually returned to economic activity after closing their businesses. Among closed small business owners and the self-employed, those who complete a recognized employment or re-startup program after signing a Fresh Start Fund agreement and successfully achieve employment or re-startup may apply once for the removal of public records, subject to meeting the relevant requirements.

However, since public records are also removed through a separate system upon faithfully fulfilling Fresh Start Fund debt adjustment for a certain period, apart from the support granted upon successful employment or re-startup, the two support procedures need to be distinguished and confirmed. ■ Supporting Documents Must Be Submitted Within One Month of Program Completion or Employment

When applying for employment or re-startup linked support, documentation verifying program completion and employment or re-startup is required. Completion certificates can be submitted within one month of the completion or employment date, and separate supporting documents may be required if that period has passed.

The Fresh Start Fund is also expanding cooperation with local governments and local communities to strengthen linkages with re-startup support projects related to business openings and closures and improvements in the management environment for small businesses and the self-employed.

This expansion of support focuses on providing additional principal reductions or interest rate cuts to borrowers who faithfully fulfill their debt adjustment agreements, while supporting the return to economic activity of borrowers who succeed in finding employment or starting a new business after closure. However, the applicability of additional principal reductions, interest rate cuts, payment deferrals, and public record removals may vary depending on the borrower's type of debt, agreement conditions, repayment period, and program completion status. Before actually applying, it is necessary to check one's eligibility through the Fresh Start Fund's official website and counseling desk.

[This article was written based on public materials from the Financial Services Commission and the Fresh Start Fund, with AI used to refine some sentences. Eligibility, reduction rates, interest rate cuts, and requirements for payment deferrals and public record removal may vary depending on individual conditions and policy changes, so official guidance should be confirmed before applying.]