Financial authorities and local banks have agreed to offer support for indebted small business owners, including an extension on debt maturity, a discount on interest, and a reduction in the principal.

According to sources within the ruling party and the government on Tuesday, the Financial Services Commission gave a briefing on the measures during a meeting of the ruling People Power Party's special committee on price stability.

Under the so-called "new start fund" for small businesses, borrowers with a low repayment capacity will be granted a deferral period of up to three years, with a long-term installment plan extended to a maximum of ten to 20 years.

The measures come ahead of the September expiration date for the previous loan extension and deferral period offered for small businesses and the self-employed that suffered losses from COVID-19.

In the wake of interest hikes, rates will be adjusted to match those applied to mid-grade creditors, while the principal on debts held by insolvent borrowers will be reduced by 60 to 90 percent.