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The government decided Friday to provide unsecured zero-interest loans to small companies hit by funding problems from the coronavirus pandemic via private financial institutions.

The decision was made at a meeting of the government’s Council on Investments for the Future, headed by Prime Minister Shinzo Abe.

Abe pledged to help small businesses obtain effectively interest-free loans through regional banks and other lenders, including shinkin credit banks and shinyo kumiai credit cooperatives, while allowing them to skip repayments on the principal for up to five years.

The government will include the measure in its emergency economic support package, which is due to be adopted Tuesday.

Participants at the meeting called for a variety of support measures for small firms, expressing concerns about rapid deterioration of the services sector.

Last month, a government-affiliated financial institution started providing zero-interest collateral-free loans. But it is taking time for applicants to receive them because of the overwhelming number of inquiries.

Also, participants broadly agreed on a plan to establish a program to grant cash benefits to small firms at risk of bankruptcy to help them continue operations.

Meanwhile, the ruling Liberal Democratic Party on Friday adopted a package of tax relief measures to mitigate the economic impact of the pandemic.

The package, approved at a general meeting of the party’s Research Commission on the Tax System, includes exemptions for fixed-asset and city planning taxes for small companies that are facing year-on-year declines of 50 percent or more in sales.

There will be no restrictions on the types of businesses eligible for the tax break, and the central government will cover the tax income lost at local governments.

Companies that see sales drop 50 percent or more in three months between February and October will be exempt from fixed-asset and city planning taxes. For companies that see sales drops from 30 percent to less than 50 percent, the taxes will be cut by half.

Separately, small companies who see sales fall 20 percent or more in a single month between February and next January will be allowed to defer payments on corporate tax and social security premiums by a year.

The coverage of the corporate tax refund program for loss-making small firms will be expanded to include midsize companies as well.

Corporate taxes will be reduced for small companies that introduce teleworking to prevent the spread of the coronavirus. Up to 10 percent of the amount of investment needed for equipment to engage in the measure will be discounted from corporate tax.

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