The Ministry of Economy, Trade and Industry plans to foster venture firms nationwide by overhauling the rules under which entrepreneurs can receive loans without providing collateral or a guarantor, METI officials said.

The ministry will introduce a new lending system under which applicants seeking to borrow money to launch new businesses will simply undergo government scrutiny to judge whether their business plans are feasible, the officials said.

Under the current system, a loan applicant is judged eligible only when the business sector he or she plans to enter is the same as the one in which the applicant is already engaged. The applicant must also stay in the business sector for at least six years and is obliged to undertake business management training sponsored by local chambers of commerce and industry for more than six months before filing an application.

Applicants meeting these criteria are eligible for loans of up to 5.5 million yen from the government-sponsored National Life Finance Corp. without putting up collateral or securing guarantors to guarantee loan repayment.

These rules have been deemed excessively severe, however, as they discourage many potential entrepreneurs from embarking on new ventures. In fiscal 2000, only 250 people deployed this loan system.

METI wants to double the number of loans for startup firms over the coming five years, the officials said.

The ministry is considering allotting funds for the new program in a supplementary budget for fiscal 2002, they said.