Korea Technology Finance Corporation's payments on behalf of borrowers tripled over five years, but it failed to recover the money

[Financial News] Although the amount of technology guarantees KOTEC provides to small and medium-sized enterprises has continued to grow, the amount KOTEC pays financial institutions on behalf of companies unable to repay their debts has also risen sharply.
While technology guarantees increased by more than 20%, subrogation payments made by KOTEC to financial institutions after companies failed to repay their loans surged by 190%. This means the amount paid on behalf of borrowers grew more than eight times as fast as the amount of guarantees provided.
Moreover, the amount recovered from those payments has declined, prompting calls for stronger management of financially distressed companies.
According to data KOTEC submitted on the 24th to the office of Cho Ji-yeon, a People Power Party lawmaker on the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee, the amount of technology guarantees provided rose 23.6%, from KRW 25.3721 trillion in 2021 to KRW 31.3621 trillion in 2025.
By contrast, KOTEC's subrogation payments surged 190.8%, from KRW 490.4 billion in 2021 to KRW 1.4258 trillion in 2025.
An even bigger problem is KOTEC's recovery performance. Although subrogation payments increased about 2.9-fold during the same period, the amount recovered fell from KRW 231.1 billion to KRW 210.2 billion.
The recovery rate for recourse claims also fell from 7.6% in 2021 to 5.0% in 2025. The recovery rate for special claims dropped from 1.0% to 0.5% over the same period.
The amount KOTEC pays on behalf of companies unable to repay their debts has risen sharply, while recovering that money has become increasingly difficult. The figures suggest that operating conditions for small and medium-sized enterprises have become equally challenging.
Guarantee defaults have also increased significantly. KOTEC's default rate rose steadily from 2.5% in 2021 to 2.7% in 2022, 4.2% in 2023, 4.7% in 2024 and 5.2% in 2025. As of August this year, the default rate stands at 4.7%.
KOTEC explained, "During the COVID-19 pandemic, companies' debt repayments were deferred and later surfaced as defaults, causing the default rate to rise. In 2026, the default rate has been showing signs of stabilizing as it gradually declines."
Cho Ji-yeon emphasized, "Technology guarantees, which support small and medium-sized enterprises with technological capabilities but insufficient collateral, are an essential system for the growth of our economy. However, for technology guarantees to help SMEs grow, management of defaults and recoveries must be strengthened alongside expanding the scale of guarantees."
[email protected] Kim Hak-jae Reporter