Private Financial Institutions Start Provision of Substantially Interest-free Funds without Requiring Collateral
- Such institutions' service schedules during the Golden Week Holidays to be hereby announced as well -
May 1, 2020
The Ministry of Economy, Trade and Industry (METI) has been advancing efforts for enhancing measures for supporting SMEs in financing amid expansion of the novel coronavirus disease. As part of these efforts, it will allow private financial institutions
1. Starting the provision of substantially interest-free funds from private financial institutions without requiring collateral and with a grace period for principal of up to five years in parallel with reducing or exempting credit guarantee fees
METI has been advancing efforts for enhancing measures for supporting SMEs in financing amid expansion of the novel coronavirus disease. As part of these efforts, it will allow private financial institutions to provide SMEs with substantially interest-free funds without requiring collateral and with a grace period for principal of up to five years, which will be conducted through the support measure by METI targeting prefectures’ and other municipalities’ projects for funding SMEs taking advantage of the Credit Guarantee System. In parallel with this, it will reduce credit guarantee fees by half or in full. Moreover, it will permit SMEs to refinance their current loans with credit guarantees as funds from private financial institutions with substantially interest-free funds, thereby reducing the burden of interest and that of reimbursement payment from SMEs.
Concerning the funding under this program, METI will encourage financial institutions to work as one-stop contact counters and to efficiently and quickly advance a variety of procedures so as to promote prompt funding to SMEs.
This program will sequentially start in prefectures and other municipalities today or from May 1, 2020. Even during the Golden Week holidays, some offices of the financial institutions will be open and will provide consultation services. If you, an SME, wish to make use of such services, visit the website of the respective financial institutions in Appendix 3 and then contact your nearby and preferred financial institution as a business partner.
*Note: Under this program, some prefectures and other municipalities may require companies to pay the full amount of interest once and then they may pay back the amount of interest after terminating the procedures, thereby allowing companies to enjoy substantially interest-free funds.
Requirements for eligible SMEs
SMEs should satisfy the following requirements concerning sales decline and should have approval for either of the No.4 or No.5* Safety Net for Financing Guarantee or the Guarantee Related to Emergencies.
|Decline in sales by 5%||Decline in sales by 15%|
|Individual business operators (only micro enterprises, including freelancers advancing feasible businesses)||No credit guarantee fees or interest required|
|SMEs, except those mentioned above||Half of the credit guarantee fees required||No credit guarantee fees or interest required|
*Note: On May 1, 2020, METI designated all industries as those subject to the No.5 Safety Net for Financing Guarantee.
- Grace period, etc.: Up to five years without requiring collateral (no personal guarantees of business operators are required in principle.)
- Upper limit of funding: 30 million yen
- Period of the support measure: SMEs are to be exempted from paying credit guarantee fees for the entire period of target funds, while they are to receive interest subsidies for the initial three years.
2. Extending the validity period of approval involving the No.4 or No.5 Safety Net for Financing Guarantee or the Guarantee Related to Emergencies
METI expects that many SMEs will make use of this program and it considers it important to mitigate crowded contact counters for issuing approval involving the No.4 or No.5 Safety Net for Financing Guarantee or the Guarantee Related to Emergencies and to securing user friendliness for applicant SMEs. From these standpoints, targeting companies that have received or will receive such approval between January 29 and July 31, 2020, METI will extend the validity period of the approval from the conventional 30 days to August 31, 2020.
- Appendix 1: Overview of the program of substantially interest-free funds without requiring collateral that private financial institutions will provide (in Japanese)(PDF:391KB)
- Appendix 2: Diagram showing the procedures through a one-stop service provided by financial institutions (in Japanese)(PDF:130KB)
- Appendix 3: Information on consultation counters for funding opened at financial institutions which will provide services even during the Golden Week holidays (in Japanese) (PDF:421KB)
- Appendix 4: Future measures for supporting companies in financing (statements by Mr. Aso Taro, Minister of Finance and Deputy Prime Minister; and those by Mr. Kajiyama Hiroshi, Minister of Economy, Trade and Industry, released on April 27, 2020) (in Japanese) (PDF:128KB)
Division in Charge
SME Financial and Subsidy Consultation Counter