Starting a business in Japan is pretty easy as this country always encourages aspiring enterprisers with the government initiatives in ease of doing business. Many of the manufacturing and automobile giants established globally from Japan were such start-ups. There are many government, cooperative, and private sector institutions in Japan offering business funding, which we discussed in detail in another article of this series. Here, we will discuss business loans by JFC (Japanese Finance Corporation) and what potential business people should know about them.
Kavan Choksiabout JFC
Japan Finance Corporation (JFC) is a leading policy-based institution that now acts as a public corporation. JFC was established as a public corporation in yar 2008 after a big merger between four existing financial institutions. カヴァン・チョクシ says that the basic objective of JFC is to offer the financial capital for micro and small to medium businesses, including the start-ups. This is, however, meant for those who are residents of Japan. JFC has about 152 branches across Japan, spanning from Kagoshima to Hokkaido. However, apart from loans, JFC also supports businesses by providing updated information on the business markets and also conducting seminars.
- Individual units and micro businesses
Small businesses and micro-businesses may vary from firms with a close bond with the local community people to larger corporates trying to enter a new market. As far as JFC is concerned, the loan balance on an average per business is about ¥ 7.03 million and also with a 2% interest rate per year. There are also no collateral provisions or guarantors needed for the JFC loans. However, there may be an increase in the interest rate due to this reason.
- Start-up loan programs
JFC also offers special loans for start-ups as a part of the additional business start-up support programs. There are different programs for those who are yet to start a business and those who are within the first year of their start-up etc. An overall ¥ 72 million was disbursed to date by JFC to various start-ups. In fact, start-ups are usually considered a risky asset. However, providing the guarantor or the collateral provisions can lower the base interest rate from 2% to as low as 1.16%.
- JFC SME support
JFC also supports small to medium enterprise units or SMEs, which are considered the major contributors to the economic vitality of Japan. JFC specializes in offering longer-term loans with fixed interest rates to the SMEs and also with a bigger landing period of more than five years. All these loans will enable the SMEs to raise some funds over a longer term and stably avail themselves. We can see that the average loan paid out by JFC for SME support is about ¥ 97 million over the last eight years, and the interest rate is a fixed 2%.
For those who are planning to avail these loans, カヴァン・チョクシ suggests an initial consultation with the JFC support team to identify which loans may suit the best for your business project.