Help may be on the way at last for small business owners who fear being stripped to nothing if their firms go bust.
The government on Wednesday announced a set of initiatives aimed at making life easier for small and midsize companies, such as increasing the amount of money that bankrupt business owners can keep at hand.
The Justice Ministry will submit a bill during the ordinary Diet session that will start next month to revise bankruptcy laws so owners of failed businesses are left with more money.
Currently, creditors can seize everything from bankrupt owners but 210,000 yen in cash plus basic items such as clothing, which critics have cited as one reason why failed business owners seldom stage a comeback in Japan.
The bill would increase the cash such owners can have to 900,000 yen, or 300,000 yen per month for three months, officials at the Ministry of Economy, Trade and Industry said.
To correct the overuse of real estate as collateral, the government will revise existing laws so it will be easier for small firms to put up inventory and accounts receivable for bank loans, officials said.
“We want to promote the idea (among lenders) that borrowing money in exchange for accounts receivable is nothing despicable,”‘ said Shinsuke Kitagawa, head of the industrial finance division at METI.
The government will also review the long-standing lending practice by banks of requiring — often unlimited — loan guarantees. But Wednesday’s announcement covered little detail, saying that “necessary reviews, including legal measures, will be conducted.”
While the announcement shows the government’s readiness to tackle fundraising and debt problems that plague small and midsize firms, which make up more than 90 percent of all businesses in Japan, it may mean little more than that, observers said.
Tateo Shimizu, a lawyer offering support for small firms in trouble, said the initiatives might lay the groundwork for future lending but won’t help firms struggling in their day-to-day operations right now.