Japan Announces Personal Guarantee Exemption for Startups
Tokyo, Dec. 23 (Jiji Press)--The Japanese government Friday released a policy package to help startups, including a new scheme allowing such companies to take out loans without personal guarantees from their managers.
The scheme, to be set up next March, will enable startups within five years of establishment to borrow up to 35 million yen without personal guarantees if they pay an additional credit guarantee fee of 0.2 pct to a credit guarantee association.
Financial institutions usually require entrepreneurs to cosign loans to their companies. The practice is widely seen as a factor discouraging entrepreneurship.
The package also includes a similar scheme to exempt small companies that are not startups from personal guarantees if they pay an additional credit guarantee fee of 0.2 pct or more depending on their business conditions.
This scheme, which the government aims to start in April 2024, will be available only to companies without loans to their managers.
[Copyright The Jiji Press, Ltd.]