How to Use the Coronavirus Subsidies for Each Situation!

Apr 17, 2020


The impact of the New Coronavirus has hit many industries in Japan economically. In response to this situation, the government has come up with various grant schemes.

This article will explain the “Credit Guarantee System” and the “Fund Loan System,” among others, which support business cash flow.This article was prepared based on the document “To the Business Owners Affected by the New Coronavirus Infection” published by the Ministry of Economy, Trade and Industry (METI) as of 21:00, March 31, 2012.Subsidy information is continuously updating, exercising caution, and referring to the most current information is advised.

Can I use the Coronavirus grant to deal with a deteriorating business situation?

There are many companies whose business conditions are deteriorating due to the New Coronavirus. To improve this situation as much as possible, the Ministry of Economy, Trade and Industry (METI) will provide support for business cash flow through the Credit Guarantee System and the Fund Loan System.

If struggling in a business, find out what kind of schemes are available to you. The difference between a credit guarantee and a loan is explained below.

A credit guarantee is a loan guaranteed by the intervention of the Credit Guarantee Association, when small and medium-sized enterprises procure funds. The inclusion of a Credit Guarantee Association makes it easier for small businesses that have a hard time gaining trust to finance their businesses.

A loan is a direct borrowing of money. A loan made by the national or local government is called a public loan. A loan from a private bank such as a consumer credit company or consumer finance company is called a private loan.

Credit guarantee: What is “Safety Net 4 and 5”?

The “Safety Net Guarantee” is a cash flow support program for small and medium-sized enterprises (SMEs) that are experiencing business difficulties. The differences between No. 4 and No. 5 are as follows.

Safety Net Guarantee No. 4

This is a cash flow support system that can be applied when sales decline by 20% or more compared with the same month last year. For regions with business difficulties in a wide range of industries, 100% of the debt is guaranteed under a separate allowance (up to 280 million yen) from the general allowance.

Safety Net Guarantee No.5

This is a cash flow support system that can be applied when sales decline by 5% or more compared with the same month last year. In particular, 80% of the debt will be guaranteed under a separate allowance from the general allowance (up to 280 million yen, the same allowance as No. 4) for industries that are experiencing business difficulties.

Also, as of March 13, the accreditation criterion has been alleviated for businesses that have been in business for more than three months but less than one year and one month.

Please note it is required to consult with a financial institution or the nearest Credit Guarantee Association, and follow their procedures before applying for a loan.

Credit Guarantee: What is a “Crisis-Related Guarantee”?

The “Crisis-Related Guarantee” is a measure that covers businesses in all industries nationwide, except for some industries that are not covered by the guarantee. Specifically, a “Crisis-Related Guarantee” (280 million yen) will be guaranteed to small and medium-sized enterprises (SMEs) and small businesses whose sales decline by 15% or more from the same month last year. The guarantee is 100%. The guarantee has been established in light of the tight cash flow experienced in SMEs and small businesses across the country.

In addition to the Safety-Net Guarantee allowance, these companies may secure a separate credit guarantee line of up to 560 million yen.

The process of application is the same as the Safety-Net Guarantee. As with the Safety Net Guarantee, independent screening by a financial institution or credit guarantee association is necessary.

Loans: What is an Interest-Free and Unsecured Loan?

An “interest-free and unsecured loan” is literary a loan interest-free. Specifically, the “Special Loan for New Coronavirus Infections” and the “Crisis Response Loan” are combined with a “Special Interest Subsidy System” to make the loan interest-free.

The “Special Loan for New Coronavirus Infections” and “Crisis Response Loan” provide unsecured loans of up to 300 million yen to companies whose sales in the last month have decreased by 5% or more in comparison to the same period of the previous year, or the year before that. Careful attention to the interest rate and other factors is necessary when using this service.

The “Special Interest Subsidy System” is a system to support cash flow by providing interest subsidies to particularly affected sole proprietors, small businesses, and SMEs. There are restrictions for both what can be applied for and for the maximum amount of interest subsidies, so we recommend checking the limits before application.

Lending: What is the “Special Loan for Measures against Drastic Changes in the Health Environment”?

The “Special Loan for Measures against Drastic Changes in the Health Environment” is a special loan system of the Japan Finance Corporation National Life Finance Corporation. It was established to stabilize the operation of environmental sanitation-related businesses who are having trouble with their cash flow and experiencing a temporary downturn in business conditions due to changes in the sanitation environment caused by an outbreak of the infection. Environmental sanitation-related businesses are those in the hotel, restaurant and coffee shop business.

The maximum loan amount is set at a separate allowance of 10 million yen, but hotel businesses are allocated a separate allowance of 30 million yen. The base interest rate is 1.91%, but for members of the household health trade union who are certified under the promotion plan, the base rate will be -0.9%.

In addition, the conditions applied and loan periods are fixed so further confirmation is essential when applying for the loan

Other: What is the “Interest Rate Reduction for the Loan to Improve Public Health”?

The “Loan to Improve Public Health” is a system that allows the use of necessary funds with no collateral and no guarantor. However, only small businesses that are running a sanitation-related business and have received management guidance from a Health Hygiene Trade Association, or similar, are eligible for the program.

In addition, the interest rate on this loan has been reduced by 0.9% under the “Special Measures Based on the Impact of the New Coronavirus Infection.”

The measure is designed to support the cash flow of small businesses whose sales have decreased due to the impact of the new coronavirus infection. The interest rate will be reduced from the normal loan rate for the first three years within the range of 10 million yen for a separate allowance. In addition, the deferment period has been extended to three years or less for working capital and four years or less for equipment funds.

For consultation..

Please find the contact information below.

・Credit Guarantee: “Safety Net No. 4 and No. 5”

Local Credit Guarantor Association

※Your Local Credit Guarantor Associations can be found on the dedicated “Local Credit Guarantor Associations” page of the Ministry of Economy, Trade and Industry website.

・Credit Guarantee: “Crisis-Related Guarantee”

Local Credit Guarantor Association

※Your Local Credit Guarantor Associations can be found on the dedicated “Local Credit Guarantor Associations” page of the Ministry of Economy, Trade and Industry website.

・Financing: Interest-Free and Unsecured Loans

> Special Loan for New Coronavirus Infections

Weekdays

Japan Finance Corporation (JFC) Business Fund Consultation: 0120-154-505

Okinawa Development Finance Corporation, Small and Medium Enterprise Loan Team 1, Loan Department 2, Okinawa Development Finance Corporation: 098-941-1785

Consultations on Weekends and Holidays

Japan Policy and Finance Corporation: 0120-112476 (National Life Business), 0120-327790 (Small and Medium Enterprises Business)

Okinawa Development Finance Corporation: 098-941-1795

>Crisis Response Financing

Shoko Chukin Bank consultation desk 0120-542-711 * Weekdays and holidays 9:00 a.m. to 5:00 p.m.

>Special Interest Subsidy System

Small and medium-sized enterprise finance consultation counter 03-3501-1544 *Weekdays and holidays 9:00 am to 5:00 pm

・Lending: “Special Loan for Measures against Drastic Changes in the Health Environment”

Weekday Consultation

Japan Finance Corporation (JFC) Business Fund Consultation: 0120-154-505

Okinawa Development Finance Corporation (ODF), Loan Department2, Start-up Loan Team: 098-941-1830

Weekend and Holiday Consultation

Japan Policy Finance Corporation: 0120-112476 (National Life Business):0120-327790

Okinawa Development Finance Corporation: 098-941-1795

・Other: Interest Rate Reduction for the Loan to Improve Public Health

Weekday Consultations

Japan Finance Corporation (JFC) Business Fund Consultation Dial: 0120-154-505

Okinawa Development Finance Corporation (ODF), Loan Department 2, Start-up Loan Team: 098-941-1830

Weekend and Holiday Consultations

Japan Policy and Finance Corporation: 0120-112476 (National Life Business), 0120-327790 (Small and Medium Enterprises Business)

Okinawa Development Finance Corporation: 098-941-1795

Conclusion: What Have We Learned About the Corona Subsidy?

The situation in Japan and the world continues to be chaotic and unsettled. The economy has stopped moving and there are many businesses and shops that are having difficulty running because the public are not leaving their homes. In the midst of this, the country has begun to set up various grant programs to help people get through the Global Depression.

If you are experiencing difficulty running your business, it is recommended to take advantage of the grant. The country has also set up a similar system for the livelihood of its citizens. In addition to the subsidies introduced here, there are also various special measures and systems, so please check if there are any subsidies that apply to you.

Subsidy information is continuously updating, exercising caution, and referring to the most current information is advised.

※Reference

“To All Business Owners Affected by the New Coronavirus Infection.” Ministry of Economy, Trade and Industry.

https://www.meti.go.jp/covid-19/pdf/pamphlet.pdf, (Referred: 2020-04-07) (Japanese)

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