Small Business Profits Plummet in Q1, Delinquency Rates Rise

In the first quarter of 2026, the average sales per small business establishment stood at 42.58 million won, a 13.38% decrease from the previous quarter. The average profit was 9.99 million won, a 13.58% drop from the prior quarter. Korea Credit Data's (KCD) '2026 Q1 Small Business Trends Report' highlights the difficulties small businesses are facing with declining sales and profits.

Outstanding overdue loan amounts for individual entrepreneurs rose to 14.6 trillion won in Q1, a 12.6% increase from the previous quarter, showing an upward trend again. According to KCD's '2026 Q1 Small Business Trends Report,' out of 3.608 million establishments with loans, 501,000 (13.9%) had closed down.

An analysis of 486 stores around the SK Hynix headquarters revealed that the sales growth rate in the surrounding commercial district during Q1, following the bonus payouts in early February 2026, was only 0.8%. This indicates that large corporations' bonus distributions did not translate into revitalization for local commercial areas.

Self-employed individuals aged 60 and over are facing increasing financial debt burdens. The number of self-employed individuals aged 60 and over grew from 1.842 million in 2015 to 2.697 million in 2025, and their financial debt surged from 96 trillion won to 405.7 trillion won during the same period. As of the end of Q1, 56.1% of low-income self-employed borrowers were elderly, with an average loan size of 390 million won.

Financial institutions and the government are implementing customized financial support measures for small business owners and self-employed individuals. These include programs like 'Small Business 119plus,' 'Sunshine Loan 119,' support funds for small business growth promotion, bank-led consulting, and debt restructuring loans for business closures.

Selective financial support and debt restructuring, considering borrowers' repayment capacity and business sustainability, should be pursued concurrently. Businesses with low recovery potential should be linked with closure and career transition support to prevent the long-term accumulation of non-performing loans. While supporting the digital transformation and management capabilities of small self-employed individuals, the focus should be on improving business models that lead to actual sales growth and cost reduction, rather than simple online expansion.