Emergency Economic Measures Real interest-free and unsecured financing
In response to the spread of the new coronavirus, the government's emergency economic measures, set out on the 7th, include a mechanism by which private financial institutions provide substantially interest-free and unsecured financing to support corporate financing. Local governments have started providing loans to utilize the prefectural system.
Real interest-free and unsecured financing of private financial institutions uses a prefectural framework called “system financing”.
The government compensates for the interest by eliminating the interest burden of the borrower for three years and repayment of the principal for up to five years.
Local governments in each region have begun responding immediately after the emergency economic measures were decided on the 7th.
The Tokyo Metropolitan Government will make adjustments to receive interest-free loans based on the current system loan framework.
Osaka and Kanagawa are considering creating new institutional loans in line with national measures.
Nara Prefecture already has an interest-free system. However, due to differences in national measures and conditions such as the financing period, we are considering creating another framework so that borrower companies can choose.
To implement this measure, it is necessary to prepare a budget in each prefecture, and it is likely that many municipalities will actually start lending after next month.