The government is arranging to increase financial assistance to small and midsize companies, as well as individual business owners, to about 40 trillion yen in measures to support their cash flow management, it has been learned.
In a new economic stimulus package to be compiled in April to ease the impact of the spread of the new coronavirus, the government will ask private financial institutions to also provide loans to business operators with effectively no interest or collateral, under a program run by government-affiliated financial institutions aimed at helping operators stay in business and maintain employment.
The government has already established a special loan system for small and midsize companies, as well as small business operators, whose sales have fallen due to the impact of the ongoing pandemic.
Under the system, the Japan Finance Corporation and other financial institutions cut interest rates on loans, and the government pays an amount equivalent to the interest rate, effectively making the loans interest-free.
However, there has been a flood of consultations and applications regarding the system, causing a delay in responses by government-affiliated financial institutions. Taking this into consideration, the government has decided to also allow private financial institutions to use the system.
The scale of the financial measures to date has been about 1.6 trillion yen. The new economic measures will likely boost the amount to more than 20 times this level.
The government will increase the budget to replenish interest payments so that financial institutions can increase their lending and also boost funding for credit guarantee associations that will take over if companies fail to repay their debts.
In the economic stimulus package compiled in April 2009 following the Lehman shock, the government provided more than 40 trillion yen in financial assistance to small and midsize companies, including measures to support cash flow management and housing loans. It plans to take measures comparable to the 2009 package in a bid to maintain employment and keep businesses running.
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