Companies run by the self-employed had debts that ballooned at the fastest pace in seven years, data showed Wednesday, raising concerns about possible credit failures.

Loans extended by lenders to such small businesses reached 209.3 trillion won ($192.2 billion) as of the end of 2014, increasing 18.8 trillion won from the previous year, according to the data by the Bank of Korea.

The on-year growth marks the sharpest gain since 2007 when it rose 19.8 trillion won. It is also equivalent to roughly half of the loans extended to households last year.

The data comes as growing household debt is feared to hurt the economy once the central bank starts hiking the base rate, which currently stands at a record low of 2 percent.

Demand for household debt grew rapidly in the second half of last year after the central bank cut the policy rate two times, in August and October, to bolster growth and boost the number of property transactions.

South Korea saw accumulated household debt break a record 1 quadrillion won last year, with loans extended via lenders increasing by a record 37 trillion won.

While loans extended to small businesses are not categorized as household debt, experts say the line between the two is blurry as some business owners borrow to use for their personal needs. (Yonhap)