KakaoBank's loan balance for sole proprietors has exceeded 4 trillion won, 3 years and 11 months after the product launch. It will also launch a refinancing product in November that allows borrowers to switch sole proprietor loans from other banks.

KakaoBank said on Thursday its loan balance for sole proprietors had surpassed 4 trillion won.

After launching its "sole proprietor credit loan" in November 2022, KakaoBank exceeded 1 trillion won in about 1 year and 2 months, 2 trillion won in 2 years and 3 months, and 3 trillion won in 3 years and 1 month. The balance then rose by another 1 trillion won in 10 months, reaching 4 trillion won in 3 years and 11 months.

It expanded its product lineup from credit loans to guarantee-backed loans and real estate secured loans. It has also signed agreements with credit guarantee foundations in 17 cities and provinces nationwide and operates guarantee-backed loans with special contributions and interest support.

Based on Korea Federation of Banks disclosures, as of end-August KakaoBank's average interest rate for new sole proprietor lending was 5.66 percent for credit loans, 3.91 percent for guarantee-backed loans and 3.48 percent for real estate secured loans. Real estate secured loans are available up to 1 billion won, and the rate as of Oct. 2 is 3.10 to 8.16 percent per year.

Among all sole proprietor loan customers, mid- to low-credit borrowers account for about 2 out of 3 people.

KakaoBank plans to launch a refinancing product in November that allows borrowers to switch sole proprietor loans from other banks to KakaoBank products with lower interest rates. Next year, it plans to introduce a joint loan with Busan Bank and enter the corporate lending sector.

A KakaoBank official said, "We will continue to expand inclusive finance so that more small business owners can access financial benefits."