japan finance corporation

September 2015This pamphlet is made of recycled paper in accordance with the environmental product standards established in the Acton Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (Green Purchasing Act). This publication has been printed using vegetable oil ink.

Japan Finance CorporationGuide to the Operations of

the Micro Business and Individual Unit

2015

1 ● Guide to the Operations of the Micro Business and Individual Unit 2015

A note on figures used in this Report:1. Figures for which the value is less than one whole unit.

Numbers of items and amounts are rounded down to the nearest whole unit. As a general rule, percentages (%) are rounded down to the nearest first decimal place when less than four and rounded up to the nearest first decimal place when five or more. Therefore, figures in the total column may not match the figure obtained by calculating all individual items.

2. Figures Figures lower than the unit are shown as “0.” “-” is shown when there is no applicable figure.

C O N T E N T S

Message from General Manager 2

Overview of Japan Finance Corporation 3

Overview of the Micro Business and Individual Unit 4

Financial Characteristics 5

5 Support for Micro/Small Business Operators

7 Great East Japan Earthquake Initiatives

8 Exercise of Safety Net Functions

9 Initiatives in the Growth Strategy Field

13 Collaboration with Chambers of Commerce and Industry, Societies of Commerce and Industry, and International Cooperation

1

2 Guide to the Operations of the Micro Business and Individual Unit 2015 ●

Yoshiharu UenoGeneral Manager, Micro Business and Individual Unit

Japan Finance Corporation

Message from

General M

anager

Message from General Manager

I would like to offer my deepest appreciation for your

continued understanding and support of the business

operations of Micro Business and Individual Unit of Japan

Finance Corporation (JFC-Micro).

In addition to financing in support of micro/small

enterprises, we also provide loans intimately related to all

phases of life such as educational loans to everyone who

requires funding for when their children enter school.

In FY2014, regarding business capital loans, we strove

to exploit the safety net function such as by providing

reconstruction support to recover from the Great East Japan

Earthquake which still has a long way to go, and cash flow

support to stabilize businesses that still face a deterioration in

the business environment.

Also, along economic growth strategies by the government,

we have been actively supporting areas that lead to regional

economic revitalization e.g. “business start-up”, “social

business”, “overseas expansion”, “business revitalization” etc.,

by making use of the know-how and experience that we have

cultivated through this project so far.

In particular, with regards to business start-up support,

we expanded the loan system for business start-up to target

women and young entrepreneurs since this is an important

measure in regional revitalization as it can help to create

employment and revitalize the economy. Furthermore, in

collaboration with regional public organizations and support

institutions, we promoted one-stop services by various

institutions and built a business start-up support network in

222 locations nationwide with the aim of providing integrated

support in the regions and improving the convenience for

business founders. In addition, we held the second business

plan “Grand Prix” for high school students to help foster

entrepreneurship in young people.

Regarding support for social businesses that use business

techniques to resolve a variety of issues amidst a declining

birthrate and aging population, besides enhancing the

support system for the social and economic revitalization of

the region and creating a loan system targeted at NPOs and

other organizations, we also conducted seminars and other

courses in collaboration with the NPO support centers and

so on.

Furthermore, we also built a cooperative loan scheme with

289 regional financial institutions nationwide and established

a cooperative loan system with private financial institutions

that focuses mainly on business start-up.

Regarding “Education Loans” to support the enrollment

of children, in order to contribute to equal opportunities

in education and reduce the financial burden of families

concerning education, etc., we improved the loan system

and procedures, contributing to a total number of 5.17

million loans being extended since the fund was established.

Going forward, as a financial institution that maintains

close ties with the region, we intend to collaborate with

support institutions for micro businesses such as Chambers

of Commerce and Industry, Societies of Commerce and

Industry etc., to fully support the growth and sustainable

operation of the micro businesses.

In addition, based on the “Strategy for Overcoming

Population Decline and Vitalizing Local Economy” which

was decided by the Cabinet at the end of last year, on top of

collaborating with regional private financial institutions, we

are actively involved in regional revitalization work, including

participating in the enactment of general regional strategies.

We will continue to make use of the network of 152

branches nationwide and various management resources

such as the experience and know-how that we have

cultivated, to achieve the mission of our financing projects.

We hope to gain your continued understanding and

support.

2


Overview of Japan Finance Corporation

(Billion yen)

FY2008 FY2010FY2009 FY2011 FY2012 FY2013 FY2014

6,141.95,421.1

0

3,000

6,000

9,000

12,000

Total Loans Provided

5,285.35,756.66,017.5

10,336.2

4,725.7

Japan Finance Corporation (JFC) is a policy-based financial institution which developed out of the National Life Finance Corporation, the Agriculture, Forestry and Fisheries Finance Corporation and the Japan Finance Corporation for Small and Medium Enterprise.

Profile of JFC (as of March 31, 2015 ) Basic Philosophy

Following the national policy, provide flexible policy-based financing by utilizing a variety of financing programs and schemes to meet the needs of society, while complementing the activities of private financial institutions.

Strive to conduct highly transparent and efficient business operations based on a high level of corporate governance and hold itself accountable to the public. Furthermore, JFC is committed to becoming a self-governing organization continuously evaluating and improving its activities.

Focused Policy-based Financing

Mainstreaming Governance

Synergy E�ectSupporting revitalization of local

and regional economies

Supporting business growth of customers

Supporting the globalization of SMEs

Micro Business and Individual Unit

Operations aimed at micro businesses and individuals

Scope of operations●Small loans for micro/small businesses

●Support for business start-ups and regional revitalization

●Educational Loans, and Loans Secured by Government Pensions, etc.

Small and MediumEnterprise (SME) Unit

Operations aimed at SMEsScope of operations

●Long-term business funds for SMEs●Support for innovation, overseas expansion

and business revitalization●Acceptance of insurance on Credit Guarantee

Corporation (CGC) guaranteed liabilities involving loans to SMEs and

micro businesses

Operations aimed at agriculture,forestry, �sheries and food business

Agriculture, Forestry, Fisheries

and Food Business Unit

Scope of operations●Loans for agriculture, forestry, �sheries and foodbusiness that foster and support principal farmers●Loans for food industry that support food safety

and security, and close collaboration betweenagriculture and food industry

●Management support services such asconsulting and businessmatchmaking services

Operations to Facilitate Crisis Responses and Speci�c Businesses Promotion, etc.●Providing a certain credit to designated �nancial institutions at the occurrence of crises certi�ed by the competent ministers, such as domestic or international �nancial disorder, large-scale natural disasters, and other similar events.●Providing loans to designated �nancial institutions based on the Low Carbon Investment Promotion Act.●Providing loans to designated �nancial institutions based on the Industrial Competitiveness Enhancement Act.

Major Business Operations of JFC

● Name: Japan Finance Corporation (JFC)

● Establishment: October 1, 2008

● Statutory Law: The Japan Finance Corporation Act

● Head Office: Otemachi Financial City North Tower 1-9-4, Otemachi, Chiyoda-ku, Tokyo, Japan

● Governor & CEO: Koichi Hosokawa

● Capital, etc.: Capital: 3,855.0 billion yenCapital reserve: 1,965.7 billion yen

● Branch Offices: Japan: 152Overseas representative offices: 2

● Employees: 7,364 (budgetary fixed number for FY2015)

● Outstanding Loans: 20,068.5 billion yen Micro Business and Individual Unit 7,126.1 billion yen Agriculture, Forestry, Fisheries and Food Business Unit 2,642.9 billion yen Small and Medium Enterprise (SME) Unit 6,181.9 billion yen

(finance operations) Operations to Facilitate Crisis Responses 4,035.6 billion yen Operations to Facilitate Specific Businesses Promotion, etc. 81.8 billion yen

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Overview

of the Micron Business and Individual U

nit

Overview of the Micro Business and Individual Unit

Providing Loans for a Wide Variety of Activities Closely Related to National Life, Including Business Financing

●Breakdown of Loans (FY2014)

Special Loans46.5%

Safety-net Loans30.1%

Other Special Loans16.4%

Educational Loans30.4%

Environmental HealthBusiness (EHB) Loans(including ManagerialImprovement Loans forEHB)2.3%

ManagerialImprovement Loans9.8%

General Loans4.7%

Loans Secured by GovernmentalPensions or Mutual Pensions, etc.6.4%

Amount2,428.0 billion

yenSpecial Loans

74.9%

Educational Loans7.5%

Environmental Health Business(EHB) Loans (includingManagerialImprovementLoans for EHB)2.2%

General Loans5.8%

Other Special Loans22.7%

ManagerialImprovementLoans9.2%

Safety-net Loans52.2%

Loans Secured by GovernmentalPensions or Mutual Pensions, etc.

0.4%

Number of loans410,000 loans

●Financing Performance of Business Funds

(Billion yen) (Thousand)

Amount

0

1,000

2,000

3,000

4,000

0

100

200

300

400

FY2013 FY2014FY2012FY2011FY2010FY2009

270 270 260

2,277.1

250

2,236.12,332.7 2,407.3

310340

2,605.52,807.5

Number of loans

Micro/small businessoperators

People who requireeducational

�nancing

Those who receive a pensionor mutual aid association

pension

●Educational Loans (National Educational Loans) Provided to parents and guardians of students who have entered or are already matriculated at high schools, universities, etc.

●Loans Secured by Governmental Pensions or Mutual Aid Association Pensions, etc. Provided to people who require funding for housing or businesses, etc.

●Ordinary Loans Management support

●Environmental Health Business Loans

Financing ProgramsCustomers

Corporations/Individuals in all types of business (may be unavailable to some people)

Special Loans Managerial Improvement Loans (MARUKEI loans)

Corporations/Individuals involved in businesses start-ups and expanding business operations overseas

Corporations/Individuals under the managerial advice from Chambers of Commerce and Industry or Societies of Commerce and Industry

Micro/Small Business Management Development Support Fund

For those who obtained support from a certi�ed Chambers of Commerce and Industry, Societies of Commerce and Industry for their business planning and planned business implementation

General Loans

General Loans Environmental HealthImprovement Loans

Corporations/Individuals engaged in environmental health related businesses

Business Promotion Loans

Provided to environmental health trade association members who have received approval for business promotion plans

Cor porat ions/ Indiv iduals receiv ing management guidance from environmental health trade associations, etc.

Consultations onnew business

establishment

Managementconsultations

Informationsharing

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◦The average loan balance per business is 6.91 million yen, most of which were small loans.

◦The percentage of unsecured loans exceeds 70% of the total.

◦ Borrowers are mainly micro/small business operators such as bakeries, restaurants, barber shops and hairdressers, building contractors, and others that have a close relationship with the people in local communities.

◦ Approximately 90% of the borrowers have nine or fewer employees, and approximately half of them are sole proprietorship.

◦Number of Business Borrowers and Average Loan Balance per Business (as of end of FY2014)

JFC-Micro Total for Credit Associations (267 credit associations)

Total for Domestic Banks(139 banks)

Number of business borrowers (million) 0.90 1.12 2.00

Average loan balance per business(million yen) 6.91 37.16 89.06

Notes: 1. Figures for JFC-Micro are the total of General Loans and Environmental Health Business Loans. 2. Domestic banks include major commercial banks, regional banks, secondary regional banks, and trust banks. 3. Figures for credit associations and domestic banks do not include loans to individuals (loans for housing, consumption, tax payments, etc.), loans to regional public

organizations, overseas yen-loans, or loans made to businesses in foreign countries in name of their domestic branches. Number of business borrowers for credit associations and domestic banks are based on the number of loans.

Source: Bank of Japan website

● Breakdown of Loans by Type of Collateral (Based on the Number of Loans)

No collateral77.2%

Secured by collateral22.8%

259,683(FY2014)

Note: The breakdown is for the total of General Loans (direct loans) and Environmental Health Business Loans (direct loans).

● Breakdown of Loans by Number of Employees (Based on the Number of Loans) (FY2014)

Between 10 and 197.3%

20 or more 3.6%

Between 5 and 919.0%

4 or fewer70.0%

Note: The breakdown is for the total of General Loans and Environmental Health Business Loans (direct loans).

● Breakdown of Loans by Capital, Individual and Corporation (Based on the Number of Loans) (FY2014)


Corporation/Capital over 10 million yen5.9%

Corporation/Capital of 10 million yenor less49.1%

Individual45.0%

Financial Characteristics Support for Micro/Small Business Operators

Business Loans have been Provided to 900,000 Businesses, Most of which were Small Unsecured Loans

Most Borrowers are Micro/Small Business Operators, with Approximately Half Sole-proprietorships

5


Financial Characteristics

We provide a wide variety of loans to micro/small business operators in diverse communities and working in all types of businesses through our 152 branch offices around the country.

● Breakdown of Balance of Loans by Region (Based on Amount of Loan) (as of end of FY2014)

Notes: 1. Figures for JFC-Micro are the total of General Loans and Environmental Health Business Loans.　　2. Domestic banks include major commercial banks, regional banks, secondary regional banks, and trust banks.　　3. Figures for credit associations and domestic banks include loans to individuals (loans for housing, consumption, tax payments, etc.), loans to regional public organizations, overseas yen-loans, or loans made to businesses in foreign countries in name of their domestic branches.Source: Bank of Japan website

0

10

20

30

40

50

6055.5

13.5

19.5

11.4 11.3

7.08.6 8.8

6.94.1 4.1 3.44.0 4.0

2.7 2.1 2.5

30.5

Kanto Kinki Kyushu Chubu Tohoku Chugoku Hokuriku Hokkaido Shikoku

JFC-Micro Domestic Banks(%)

Note: The breakdown is for the total of General Loans and Environmental Health Business Loans (direct loans).

Restaurant&

Accommodation8.1%

Others20.9%

● Breakdown of Balance of Loans by Type of Business (Based on Amount of Loan) (as of end of FY2014)

Wholesale & retail23.2%

Services22.6%

Construction14.4%

Manufacturing10.9%

■ Inquiries for Business Loans:

Business Loan Consultation Phone Number

0120-154-505Hours of Operation, Monday to Friday: 9 am to 7 pm

＊Not available on weekends, national holidays, and during the New Year holidays.

＊You can request a consultation via the website.

Borrowers Include a Wide Variety of Micro/Small Business Operators, from Retail Stores with Close Connections to Life in Local Communities to Cutting-edge Companies

Micro/small business operators represent an overwhelming majority of companies of every type and in every field of business at 87% of the total businesses in Japan. For example, borrowers include traditional retailers such as local grocery stores and neighborhood contractors, etc., as well as leaders in cutting-edge biological, IT, and other types of know-how and technology. In terms of growth stage, borrowers include companies with a short history that are aiming for growth and companies with a solid business. Borrowers include a wide variety of micro/small business operators from companies with a close relationship to local communities to companies ready to enter new markets.

● Breakdown of Loans by Number of Years in Operation (Based on the Number of Loans) (FY2014)

Under 10 years32.0%

10 or more yearsUnder 20 years

19.2%

20 ormore years

Under 30 years13.7%


10.8%


9.4%

50 or more years14.9%


Provide Loans to Nearly All Regions and Types of Business

Japan Finance Corporation Search

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Great East Japan Earthquake Initiatives

JFC-Micro supports the rehabilitation and reconstruction of micro/small businesses that have suffered damage at times of disaster such as earthquakes, typhoons and heavy snowfalls, by means of Disaster Loans that have more favorable repayment conditions than regular loans, such as a longer repayment period or a longer grace period for the principal. In the wake of the Great East Japan Earthquake that struck on March 11, 2011, JFC-Micro has provided support for the recovery and reconstruction efforts of small business operators who were victims of the disaster through the “Great East Japan Earthquake Recovery Special Loans.”

A total of 216,584 loans totaling 2,091.7 billion yen have been made to borrowers affected by the Great East Japan Earthquake between the time the disaster happened and March 31, 2015.

● Trends in Loans for the Great East Japan Earthquake (Cumulative) (March 11, 2011 - March 31, 2015)

0

500

1,000

1,500

2,000

2,500

0

50,000

100,000

150,000

200,000

250,000

● Performance of Loans for the Great East Japan Earthquake (Cumulative)　 (March 11, 2011 to March 31, 2015)

(Billion yen) (Number of loans)

Sep. 30, 2011 Mar. 31, 2012 Mar. 31, 2014Mar. 31, 2013 Mar. 31, 2015

2,091.7

1,443.2

757.4

2,008.4

216,584

76,339

205,552

1,915.4

193,322

145,361

Number of loansAmount

Note: Loans for the Great East Japan Earthquake include Disaster Loans and Great East Japan Earthquake Recovery Special Loans (cumulative).

Great East Japan Earthquake Loan, Example No. 1: Support for the Relocation to a New Restaurant

Company A is an Udon noodle restaurant that insists on using food ingredients produced locally in Iwate Prefecture. Besides home-made noodles that mix wheat produced in Iwate Prefecture, the company also provides other food materials to adorn the udon such as the stock and sauce made using carefully selected ingredients. Due to the tsunami, the company suffered immense damage that destroyed the entire restaurant. The company operated at a temporary facility for a while but relocated to a new restaurant in September 2014. For this project, JFC-Micro provided loans to the operating funds to stabilize the cash flow before and after the relocation.

Mixes and uses “nebarigoshi”, a flavorful southern wheat powder

Great East Japan Earthquake Loan, Example No. 2: Support for Factory Relocation Due to the Earthquake Disaster

Company B processes and manufactures coils that are manually wound by technicians for use in industrial motors in Fukushima Prefecture. Due to the nuclear accident, the company had to stop operating at its main factory in Minami-Soma city, which is in an Evacuation Directive Lift Prepared Area. The company built a new factory outside the Evacuation Directive Lift Prepared Area in the same city and started operating there in April 2015. For this project, JFC-Micro provided loans to the purchase of the machinery installed in the new factory together with a production site development subsidy and a loan from a private financial institution. Servomotor electrical works

◦ Overview of the Great East Japan Earthquake Recovery Special Loans (Portion Handled by JFC-Micro)

Borrowers (Note 1) Credit Ceilings Repayment period (grace period)

Corporations/individuals who directly suffered damage from the earthquake or nuclear reactor disaster 60 million yen

(in addition to all types offinancing facilities)

Facilities and Equipment: 20 or fewer years (5 or fewer years) Operation: 15 or fewer years (5 or fewer years)

Corporations/individuals who indirectly suffered damage from the earthquake or nuclear reactor disaster

Facilities and Equipment: 15 or fewer years (3 or fewer years) Operation: 15 or fewer years (3 or fewer years)

Corporations/individuals who suffered other damage due to the disaster (damage caused by harmful rumors, etc.) 48 million yen (Special)(Note 2)

Facilities and Equipment: 15 or fewer years (3 or fewer years) Operation: 5 or fewer years (1 year or less)

(8 or fewer years when required in special cases (3 or fewer years))

Notes: 1. Limited to those who conduct business and have places of business within specific disaster areas. For information about specific disaster areas, contact the consultation desk of a branch office.

2. Members of Environmental Health Trade Associations whose promotion plans have received approval receive 57 million yen (Special Operation Funding only).

We Provide Support to the Recovery and Reconstruction Efforts of Micro/Small Business Operators Affected by the Great East Japan Earthquake

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Exercise of Safety Net Functions

We are meeting the demand for a safety net for micro/small business operators whose financing is affected by the social and economic environments changes, etc. “Safety-Net Loans (including earthquakes)” in FY2014 totaled 123,893 loans. In addition, “Business Support Safety-Net Loans (Loans for a Changing Business Environment) in FY2014 to corporations/individuals who had a fixed debt burden and who suffered temporary worsening of their financial condition totaled 6,370 loans.

A special consultation desk is immediately established in case of an unforeseen event such as a natural disaster or a major corporate bankruptcy so that affected micro/small business owners can consult about their loan and repayment conditions.

0

50,000

100,000

150,000

200,000

250,000(Loans)

Note: Performance of the number of Safety-Net Loans and Environmental Health Safety-Net Loans (including earthquakes) issued to the business operators.

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

141,067

238,041218,438

167,024

123,893138,106156,596

● Financial performance of Safety-Net Loans (number of loans)

Economic downturn precipitatedby the Lehman Brothers

bankruptcy in 2008

E�ects of the strong yen

Great East Japan Earthquake in 2011

Overview of Management Support-Type Safety-Net Loans (Note 1)

Corporations/individuals who have a heavy debt burden, are under pressure to improve management, and have created a business plan per management direction and advice from an approved management improvement, etc. support organization (Note 2) or JFC are eligible for special interest rates.Notes: 1. Refers to Safety-Net Loans and Environmental Health Safety-Net Loans.

2. An “approved management improvement, etc. support organization” is defined as a support organization (licensed tax accountant, certified public accountant, small and medium enterprise management consultant, etc.) that operates under the SME New Business Activities Promotion Law. See the website of the Small and Medium Enterprise Agency for details.

◦ Overview of Safety-Net Loans

Types of loans Customers Loan amounts Repayment period

Funds for changes in thebusiness environment

Corporations/individuals whose business conditions havebeen negatively affected by declines in sales, etc. 48 million yen Facility & Equipment 15 or fewer years (3 or fewer years)

Operating 5 or fewer years (1 year or less)(8 or fewer years when required in special cases (3 or fewer years))Funds for changes in the

financial environmentCorporations/individuals who are suffering financingdifficulties due to the bankruptcy of their financial institution Special 40 million yen

Funds for bankruptcies ofcustomers

Corporations/individuals who are suffering businessdifficulties due to the bankruptcy of their customer(s), etc. Special 30 million yen Operating 5 or fewer years (3 or fewer years)

(8 or fewer years when required in special cases (3 or fewer years))

Note: The same system exists for members of Environmental Health Trade Associations whose promotion plans have received approval (Only for operating loans. Does not include Loans for Customer Bankruptcy).

Main Consultation Desks Currently in Operation (as of May 31, 2015)

Number ofconsultation desks Names of main consultation desks Date of

establishment

Disaster-related 16

Special consultation desk for the Great East Japan Earthquake Mar. 2011

Special consultation desk for damage suffered as a result of Typhoon No. 26 in 2013 Oct. 2013

Special consultation desk for damage suffered as a result of heavy snowfall that began on February 14, 2014 Feb. 2014

Special consultation desk for damage suffered as a result of the heavy rains starting from August 15, 2014 Aug. 2014

Special consultation desk for damage suffered as a result of the earthquake in the northern part of Nagano in 2014 Nov. 2014

Others 4Special consultation desk for countermeasures against increases in the cost of raw materials and energy Feb. 2014

Special consultation desk for overcoming deflation, etc. Feb. 2014

JFC-Micro Supports the Financing of Small Businesses Operators in Response to Changesin the Management, Financial, and other Environments

A Special Consultation Desk has been Established to Quickly Handle Consultations from Micro/Small Business Operators


8


Initiatives in the Growth Strategy Field

There is not a few business start-ups consisting of those that have yet to start and those that are newly start-up face difficulties in obtaining funding for such reasons as a lack of business track record. JFC-Micro also actively provide loans such business start-ups. In addition, to enable people wanting to start up their own businesses to receive one-stop information about start-up business within each region, JFC is constructing a nationwide start-up support network in 222 locations in cooperation with municipalities, Chambers of Commerce and Industry, Societies of Commerce and Industry, and universities.

The scope of business start-ups is broadening as the economic system becomes more diverse with start-ups by women who take advantage of their ability to notice the small things in daily life, young people who utilize novel ideas in their business start-ups, and seniors who draw on their many years of experience when they establish new businesses. In such a trend, JFC-Micro actively provides loans to such women, youth, and senior entrepreneurs.

[Job Creation Effects]26,010 companies average of 4.0 employees (Note) = 104,040Note: The average number of employees at time of business start, based on Survey on

Business Start-ups in Japan (FY2014) by the JFC Research Institute.

Example of a Loan Provided to a Woman Entrepreneur: Establishing a Restaurant Using Self-cultivated Agricultural Produce

Company C was established as a farmer’s restaurant to provide meals using freshly-harvested vegetables grown using natural cultivation methods on the farmland of the representative’s family. The company is developing, manufacturing and selling food products (corn soup, dressing, pickles, etc.) using surplus agricultural produce of the company and those in the region. Besides neighborhood residents, there are also many tourists visiting from the cities during summer. For this project, JFC-Micro provided loans to the equipment funds expenditure for the construction of the restaurant, etc. in collaboration with the local credit association which is also an approved management innovation support organization.

Farmer’s restaurant where freshly-harvested vegetables can be savored

Example of a Loan Issued to a Young Entrepreneur: Spreading Japan’s Cute Cartoon Characters Around the World

Company D developed a corporate Facebook page specializing in Japan’s cute cartoon characters. The company has created a business model that takes advantage of the 5.7 million followers of its Facebook page to derive income from affiliations with webstores and advertising. It has received praise for its method of popularizing cute Japanese cartoon characters around the world, and has been chosen as a Ministry of Economy, Trade and Industry “Company with an eye for establishing new business and training support personnel.” JFC-Micro provided loans to the operating funds until sales reached expected levels. From Company D’s Facebook page

Loans Made to Women, Youth and Senior Entrepreneurs (Number of Businesses)

Women Youth (aged under 30) Seniors (aged 55 and older)

FY2013 FY2014 FY2013 FY2014 FY2013 FY2014

4,630 businesses　→　5,070 businesses 1,817 businesses　→　1,823 businesses 2,283 businesses　→　3,088 businesses

Note: Women who also qualify as youth or seniors are included in the Women category.

0

10,000

20,000

30,000

● Performance of Loans Issued to Start-up Businesses (Number of Businesses)　 (Consisting of Those that have yet to Start and Those that are Within 1 Year of Start-up)

(Number of companies)

26,010

19,46922,800

FY2012 FY2013 FY2014

The Number of Loans Made to Business Start-ups (Consisting of Those that have yet to Start and Those that are Within 1 Year of Start-up) has Reached Approximately 26,000 a Year

JFC-Micro Actively Supports Women, Youth, and Senior EntrepreneursFina

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The number of loans made to business start-ups (consisting of those that have yet to start and those that are within 1 year of start-up) totals approximately 26,010. 17,024 businesses received loans under the New Start-up Loan program in FY2014. The program provides no-collateral, no-guarantor loans to start-ups that have not yet filed their tax returns for their second business year. Approximately 104,000 jobs have been created as a result of loans issued to business start-ups. This is a level that is on par with the number of employees at 76 major companies (Note).Note: Calculation based on an average of 1,364 employees at major companies as

reported in the supplementary statistical information of the Small and Medium Enterprise White Paper (2014 edition).

● Performance of Loans Issued to Start-up Businesses (Number of Businesses)

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Example of Loans Provided to a Revolutionary Company that Utilizes a High Degree of Technical Skill: Supporting Development and Other Funds

Company G is a venture company of a national university possessing design and production technologies for 3D integrated circuits (3D LSI) that stack up integrated circuits three-dimensionally. Generally, integrated circuits (LSI) are arranged on a flat circuit board but by stacking up the circuits three-dimensionally, the distance to send signals becomes shorter compared to conventional circuits and the circuits can be connected by signal cables. As a result, the processing speed is increased and the power consumption is reduced, allowing the circuits to be made even more compact. For this project, JFC-Micro provided loans to the equipment funds required to install a clean booth with a high cleanliness level in the research facility and the operating funds incurred in development and manufacturing, with a focus on the possibility of expanding the advanced technical strengths of the company to leading companies in the region.

High cleanliness level clean booth of the company

Example of a Senior Entrepreneur: Restaurant for Senior Interaction

The Company E established a restaurant which aims seniors network and interaction with the connections they had created during their years in the business world. As the customers were to be seniors, it was important to create an atmosphere that was comfortable for seniors to get together and talk over drinks. The company plans to create tie-ups with local community centers in order to expand the scope of their activities. JFC-Micro provided loans to the equipment funds such as remodeling of the store and the purchase of kitchen equipment, and the operating funds such as initial purchases of merchandise in stock. Outside view of the restaurant

High School Student Business Plan Grand Prix

In FY2014 JFC-Micro held the second “Creativity Unlimited: High School Student Business Plan Grand Prix” that accepted entries from high school students from around Japan. 1,717 entries were received from 207 high schools and school visits were made to 148 schools to provide help with the creation of the students’ business plans. Finalists from 10 schools gave enthusiastic presentations at the last round of judging, which took place in January 2015. The project presented by students from Gojo High School (Aichi Prefecture), “Butterfly Effect - Saving the World with Your 1 Yen” won the Grand Prize. The event was widely covered in the media. JFC-Micro is committed to continuing in its effort to increase the number of future entrepreneurs by planting the seeds of entrepreneurship among high school students and other young people.

◦ For details, see the JFC website ⇒ http://www.jfc.go.jp/n/grandprix/index.html

Students at Gojo High School receivingtheir Grand Prize award

Example of Funds Provided by the Capital Subordinated Loans: Supporting the Mass Production of Hybrid Electricity Storage Systems

Company F is a venture company that develops and supplies storage batteries and electricity storage systems. The company has succeeded in commercializing a hybrid electricity storage system that reduces cost substantially without the risk of overcharging despite being a lithium ion battery. The company’s patented technology is used to integrate a lithium ion battery and lead battery etc. into an aqueous battery. This can be applied to a variety of applications e.g. emergency power source for various facilities, storage of excess electricity generated by solar power generation and other sources, independent power supplies for various industrial equipment, car-mounted applications for cars equipped with idling-stop mechanisms, and so on. For this project, JFC-Micro provided loans to the operating funds required for the period until mass production is started.

Hybrid storage batteryof the company

Many revolutionary technologies were first developed in university research labs. JFC-Micro provides loans to a university spin-off venture through cooperation with local universities.

JFC-Micro Supports Venture Businesses Originating in Universities through Cooperation Between Industry and Academia


JFC-Micro actively support micro businesses with a high growth potential that possess innovative technologies and know-how e.g. R&D venture companies.

“Capital Subordinated Loans” are loans that possess features such as lump sum repayment at maturity and interest rates that are set according to performance and so on. They can be treated as “owned capital” rather than a “debt” for financial inspection purposes. Using this loan system, JFC-Micro supported a total of 119 companies in FY2014 (117.8% compared to the previous year) which have to bear large R&D and other costs while possessing high technological capabilities.

0

500

1,500

1,000

2,000

2,500

● Financial performance of Capital Loans

(Million yen)

2,149(125.7%)

119(117.8%)

76

1,710

5

101

FY2012 FY2013 FY20140

60

40

20

100

80

120

140(Companies)

Number of companiesAmount

Notes: 1. Figures in parentheses are on the year-on-year basis. 2. The figure of 2012 is the record of only March 2013 (one month). 3. Excluding the companies utilizing a corporate reconstruction fund.

JFC-Micro Supports Businesses that Take on the Challenge of Innovative New Technologies

● Financial Performance of “Capital Subordinated Loans”

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11● Guide to the Operations of the Micro Business and Individual Unit 2015

Initiatives in the Growth Strategy Field

JFC-Micro supports leaders of social businesses which commits to resolve regional and social issues, such as supporting the care and welfare of the elderly and disabled, child rearing, urban development, environmental conservation, and regional revitalization, and which create steady and sustainable employment. The FY2014 loans to social businesses came to: 6,045 loans, 51.7 billion yen (of which 957 loans, 7.3 billion yen were loans to NPOs).Note: Prior to FY2013, total loans to social businesses included loans to (i) NPOs and (ii)

Care and Welfare businesses (excluding duplicate loans to (i), (ii)). However, in FY2014, loans to (iii) businesses for the purpose of resolving social issues were added (excluding (i), (ii)); therefore no comparison to the previous year is given.

JFC-Micro works in cooperation with JETRO, the Japan Federation of Bar Associations, and other specialized organizations that support overseas development to conduct consultation services. Through these relationships, we provide information that meets customer needs. The number of loans provided through the Loans for Overseas Expansion totaled 773 in FY2014. Approximately sixty percent of these loans were issued to wholesalers and retailers. Customers include corporations/individuals working in fields that are popular overseas such as Japanese cuisine and local traditional crafts, the so-called “Cool Japan” fields.

Example of Funds Provided through the Loans for Overseas Expansion: Creating a New Gastronomic Culture in Muslim Countries

Example of Loan Provided to Social Business: Operating a Mini-theater Using Empty Stores

Social Business Logo

Company I manufactures steak sauces and dressings in Aichi Prefecture. Currently, the company has attracted much attention domestically and internationally as a company that manufactures halal-certified Japanese seasonings for Islamic countries. In 2014, the company participated in a trade fair held in Dubai and earned a high commendation for selling a limited edition product of the highest quality at 100,000 yen each. Having developed a firm grasp of overseas development, the company’s policy is to expand its business sequentially mainly in Islamic countries in future. For this project, JFC-Micro provided loans to the operating funds required for the company’s overseas expansion.

Company H is an NPO involved in regional revitalization efforts by renovating empty store into a “mini-theater for residents”. Besides the latest digital works, the theater also screens interesting works using an old movie projector that rotates the film and projects the image with a lamp.　For this project, using the “Social Business Support Fund” which was established together with the enactment of the FY2014 supplementary budget, JFC-Micro provided loans to the purchase of the movie projector lamp and the expenses for organizing an event where guests such as movie directors etc. were invited to.

A logo has been created and used in PR and other activities in order to widely let people know the social businesses which are resolving regional and social issues. The logo represents, by using the letter “S” in the word “social business”, a state of various main entities such as companies, NPOs, residents, administrative and public agencies, etc., joining hands to resolve issues that local communities have.

Limited edition product of the highest quality exhibited at the trade fair

Exterior of a building once used as a sake brewery

0

20

60

40

80

100

● Financial performance of Social Business-related Loans (Note)

(Billion yen)

51.7

6,045

FY2012

44.941.4

4,4334,987

FY2013 FY20140

4,000

3,000

2,000

1,000

6,000

5,000

7,000(Loans)Number of loansAmount

● Breakdown of Loans by Type of Business (Based on the Number of Loans) (FY2014)

Wholesale & retail59.5%

Manufacturing21.6%

Services 7.9%

Others 7.1%

Telecommunications 3.9%

JFC-Micro Supports Social Businesses

JFC-Micro Supports Micro/Small Businesses Seeking to Expand Overseas through Information and Funding

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JFC-Micro supports parties working to revitalize city centers and shopping districts by providing loans under programs including the business vitality strengthening fund and the Loans for Modernization of Grocery Retailers, and information to such as local governments.

Through the financial programs for business reconstruction & business succession support, the JFC-Micro supports parties undergoing corporate reorganization through involvement of the Small and Medium Size Business Rehabilitation Support Co-operative, approval of reconstruction plans based on the Civil Rehabilitation Act, or collaboration with private financial institutions, and business succession. In addition, corporate support officers have been deployed at 152 branches nationwide to respond flexibly to requests for relaxing repayment terms e.g. a reduction in the installment amount, temporary deferment of principal repayment etc., and to provide advice for the resolution of business issues and support for the enactment of business improvement plans.

◦Number of loans to businesses in approved city centers (FY2014)

Number of loans Amount

Total Loans Provided 13,905 115.9 billion yen

◦ Total Loans Provided (FY2014) related to the Business Reconstruction and Business Succession

Number of loans Amount

Total Loans Provided 226 3,301 million yen

Business Start-Up Support Desks provide services in which specialists offer advice on business start-up plans to people planning to start up a business and offer a wide variety of information on starting a business. Overseas Expansion Support Desks offer consultation services on financing and various issues such as required approvals and checking contract details through relationship with JETRO and the Japan Federation of Bar Associations, etc. The Desks provide detailed support to meet customer needs.<<The 152 branch offices throughout the country are open weekdays from 9 am to 5 pm. No appointment necessary.>>

● Locations (as of June 2015)

Business Start-up Support Centers

Business Support PlazasHokkaido

Tohoku

Kita-Kanto Shinetsu

Tokyo

Minami-Kanto

TamaHokuriku

NagoyaKyoto

Osaka

KobeChugoku

ShikokuFukuoka

Kumamoto

[Business Start-up Support Centers]◦ Centers are located in 15 regions of Japan from Hokkaido to Kyushu.◦ Centers provide timely support to customers through collaboration

with regional organizations that support start-ups.◦ Centers organize diverse seminars targeted at customers in varying

stages of their business cycle, both before and after starting business.FY2014Number of times instructors were sent to business start-up support organizations, etc.: 435Number of business start-up seminars conducted: 249[Business Support Plazas]◦ In six locations: Sapporo, Sendai, Tokyo, Nagoya, Osaka, and Fukuoka.◦ Appointments for consultation are available to persons who plan to

start a new business and those who have never used JFC’s services.◦ For those who cannot visit during regular business hours, weekend

and evening appointments are also available (excluding national holidays).

Notes: 1. Sunday consultations are available on first and third Sundays of each month at Tokyo Business Support Plaza. 2. Night consultations are available at Tokyo Business Support Plaza (every Thursday) and Osaka Business Support Plaza (every Tuesday).

Supporting Revitalization in City Centers and Shopping Districts

JFC-Micro Supports Micro/Small Businesses as They Work to Recover

JFC-Micro is Strengthening the support for the Growth Strategy Field

Financial Characteristics● Business Start-Up Support Desks and Overseas Expansion Support Desks have been Established in the 152 Branch Offices Around the Country

● Business Start-Up Support Centers and Business Support Plazas have been Established throughout the Country

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13● Guide to the Operations of the Micro Business and Individual Unit 2015

Collaboration with Chambers of Commerce and Industry, Societies of Commerce and Industry, and International Cooperation

JFC-Micro works in close collaboration with regional Chambers of Commerce and Industry, and with Societies of Commerce and Industry throughout Japan to support business improvement of micro/small businesses via Managerial Improvement Loans (MARUKEI Loans; unsecured and unguaranteed) and consultation sessions.

Consultation sessions called “One-Day JFCs,” where staff from JFC-Micro consult on finance, are held at Chambers of Commerce and Industry and at Societies of Commerce and Industry. Every year, many micro/small businesses utilize this service.

Cooperation through Business Start-up and Management Improvement Support Seminars

JFC-Micro are proactively doing activities that support local business start-ups and management innovation by co-sponsoring business start-up and management innovation seminars with Chambers of Commerce and Industry and Societies of Commerce and Industry. At these seminars we provide simple explanations of how to create business plans, how to procure funding, JFC’s loan programs, and other issues to people interested in starting up a business or moving into a new field. Many of the people who attend these seminars later utilize JFC-Micro loans for business start-ups and management innovation.

Community Business Forum for entrepreneurs co-sponsored with Chamber of Commerce and Industry

Establishment of the “Micro/Small Business Management Development Support Fund”

A “Micro/Small Business Management Development Support Fund” was established along with the enactment of the FY2015 budget.● Overview of the “Micro/Small Business Management Development Support Fund”

Eligible users Maximum amount Repayment period (grace period)

Those who have obtained support for business planning and planned business implementation from a Chamber of Com-merce and Industry or Society of Commerce and Industry with a certified managerial development support program and working on its sustainable business development

72 million yen (of which 48 million yen is operating funds) Equipment funds: maximum 20 years (up to 2 years)Operating funds: maximum 8 years (up to 2 years)

Note: The grace period shall be up to 3 years for those with less than 5 employees.

● List of organizations with signed MOU (as of end of May 2015)

Japan Federation of Bar Associations ( Apr. 27, 2011)Japan Federation of Labor and Social Security Attorney’s Associations (Sep. 1, 2011)Japan Federation of Certified Public Tax Accountants’ Associations ( Oct. 14, 2011)Japan Federation of Shiho-Shoshi Lawyer’s Associations (Nov. 11, 2011)Japan Federation of Certified Administrative Procedures Legal Specialists Associations (Mar. 29, 2012)Japan External Trade Organization (JETRO) ( Oct. 25, 2012)

Note: Dates within parentheses are the dates the MOU were concluded.

● Structure of Managerial Improvement Loans (MARUKEI Loans)

JFC-MicroChambers of Commerce

and Industry or Societiesof Commerce and Industry

Micro/Small Business Operators

LoansConsultation,applicationManagement

guidanceRecommendation

Collaboration010,00020,00030,00040,00050,000

● Total number of Managerial Improvement Loans (MARUKEI Loans) Provided

(Billion yen) (Loans)40,08339,30340,047

198.2172.2

0

100

200

300

FY2012 FY2013 FY2014

223.7

Number of loansAmount

● Number of “One-Day JFCs” held at Chambers of Commerce and Industry and at Societies of Commerce and Industry

FY2012 FY2103 FY2014

3,021 2,696 2,532

JFC-Micro Collaborates with Chambers of Commerce and Industry and Societies of Commerce and Industry

Signing of MOU for Business Cooperation

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Managerial Improvement Loans (MARUKEI Loans) are a program whereby micro/small businesses receiving management guidance, such as from Chambers of Commerce and Industry or Societies of Commerce and Industry, can utilize funds needed for managerial improvement without collateral and guarantors. Since the program was established in 1973, it has been accessed for a total of approximately 4.92 million cases.

● Overview of Managerial Improvement Loans (MARUKEI Loans)

● Holding of “One-Day JFC” Consultation Sessions at Chambers of Commerce and Industry and at Societies of Commerce and Industry

JFC has concluded MOU to collaborate with the Japan Federation of Certified Tax Accountant’s Associations and other organizations. We are actively involved in stabilizing and strengthening the business foundation of micro businesses in collaboration with specialist institutions e.g. information provision through the dispatch of lecturers to seminars and study groups.

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JFC-Micro is collaborating with regional financial institutions that are working to strengthen their relationships with the local communities as providers of funds (“relationship banking”) mainly in the area of start-up support operations.

(Loans)

0

2,000

4,000

6,000

8,000

10,000

Cooperativeloans Collaborative

loans

FY2014FY2013FY2012

9,713

6,622

3,7983,121

860

7,029

● Collaborative Loans (Number of loans)

Notes: 1. Cooperative loans are loans issued via referral from a financial institution. 2. Collaborative loans are loans that are co-financed with financial institutions.

JFC-Micro Actively Collaborates with Regional Financial Institutions


International Cooperation

Supporting Developing Countries as ODA (Official Development Assistance) project

The Micro Business and Individual Unit provides assistance to overcome issues facing financial institutions in developing countries through technical collaboration with Official Development Assistance (ODA). This assistance has been implemented by sharing our accumulated credit analysis know-how on micro and small enterprises. In details, we are conducting seminars concerning SME finance in local cities and in Japan in cooperation with Policy Reseach Institute, Ministry of Finance. To date, these have been implemented in Vietnam and Malaysia and presently cooperating with Laos and Myanmar.

i. LaosJFC-Micro is presently implementing the second phase of the project by technical cooperation that began in June 2011 with the Lao Development Bank (LDB), which is a state owned commercial bank in Laos. This project provides our know-how in order to enhance LDB’s human resources and improve their credit analysis capabilities. Seminars in Laos and Japan have been held a total of five times, and lectures about credit analysis methods have been conducted directly to employees of the bank. JFC-Micro have been commended for this extremely meaningful projects from LDB e.g. attending seminars and taking on self-improvements.

ii. MyanmarIn January 2015, the workshop on SME finance was held for Myanmar Ministry of Finance, the Central Bank of Myanmar, the Ministry of Industry, and the Myanmar Economic Bank (MEB) at the Myanmar Ministry of Finance in Myanmar’s capital Naypyidaw. JFC-Micro gave explanations on the characteristics of Japan’s SME finance, JFC’s corporate profile, loan programs, and loan review features, etc. In April the same year, a lecture on credit analysis methods etc. was conducted for about 130 MEB and other staff in Naypyidaw and Yangon. It was a very lively seminar with many questions being posed by the students on how to grasp the actual situation of enterprises.

Accepting foreign missions, etc.

Every year, a lot of foreign missions including developing countries visit Japan to learn Japan’s experience. JFC-Micro explains our loan programs and various activities, as well as an overview of our service and history, are conducted for foreign missions that come as a part of their training under JICA and other programs.

Lecture for foreign missions

Seminar in Laos (Vientiane)

Relationship with APEC Financial Institutions Dealing with SMEs

In order to collaborate with financial institutions supporting small and medium enterprises (SMEs) in the APEC region, APEC MOUs (Note) have been concluded with 14 regional financial institutions in APEC, including the Taiwan Cooperative Bank, Small and Medium Enterprise Development Bank of Thailand (SME Bank) and so on. JFC-Micro participates in the annual meeting and conference held every year to exchange information on the support measures extended to SMEs and micro businesses.Note: Memorandum of Understanding on cooperation among APEC (Asia-Pacific Economic Cooperation) Financial

Institutions Dealing with SMEs 11th APEC MOU Annual Meeting (Taiwan)

Workshop in Myanmar(Naypyidaw)

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September 2015This pamphlet is made of recycled paper in accordance with the environmental product standards established in the Acton Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (Green Purchasing Act). This publication has been printed using vegetable oil ink.

Japan Finance CorporationGuide to the Operations of

the Micro Business and Individual Unit

2015

japan finance corporation

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