The government decided Friday to add 10 trillion yen to a special 20 trillion yen credit-guarantee scheme to help small firms and startup ventures overcome fundraising difficulties, trade chief Takashi Fukaya said. The program will be extended through the end of fiscal 2000.

The decision is based on the realization that although banks have eased their grip on lending since last year, a number of small and medium-size companies are still suffering from the credit crunch, Fukaya told Friday’s press conference.

“Recent economic recovery has depended largely on public spending, and the special credit guarantee needs to be kept in order to help move the economy toward private sector-led growth next year,” Fukaya said.

He added that the measures should give small businesses some relief as they are likely to be in need of funds toward the end of the year.

The special credit guarantee of 20 trillion yen was introduced in October 1998 to help small and medium-size companies amid the banking crisis; it was supposed to last through the end of fiscal 1999. About 3 trillion yen is still available.

The government will set aside the additional 10 trillion yen in drawing up a second supplementary budget, Fukaya said.

To encourage firms to stand on their own feet, the government will start requiring applicants to submit a constructive management plan in fiscal 2000.

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