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The government should create an environment in which failed entrepreneurs are encouraged to stage a comeback, the Small and Medium Enterprise Agency said in its annual white paper released Friday.

The 2002 white paper envisions such measures as extending more loans to rehabilitate companies and expanding the scope of property- seizure exemptions upon bankruptcies.

The agency is affiliated with the Ministry of Economy, Trade and Industry.

Only 13 percent of Japanese entrepreneurs of failed firms launch new businesses, a sharp contrast to 47 percent for their U.S. counterparts, the report points out.

Only 37 percent of failed entrepreneurs in Japan actually want to try again, compared with 72.3 percent of their American counterparts, the report says.

As a backdrop, the report says, most smaller companies rely on bank loans backed with personal and even family assets as collateral. This practice often puts entrepreneurs into insolvency when they fail.

The report calls for an environment in which entrepreneurs can raise money based on their business plans, instead of their assets.

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