Financial institutions in Japan are struggling to handle surging loan requests from small companies with cash flow problems amid the coronavirus outbreak, while also trying to reduce the number of staff for infection control.
More and more firms are in need of banks’ support as calls for refraining from going out and business closure requests now cover the entire country. Such a situation is likely to continue long term, as the timeline of the outbreak coming under control remains unclear.
Since the government announced in March its decision to offer effectively interest-free loans through affiliated financial institutions, requests for such loans have continued to increase and the pace of growth accelerated after the government declared a state of emergency over the virus on April 7.
At Japan Finance Corp., one of the government lenders, the number of requests to secure operating funds came to 260,000 as of April 19, tripling from the end of March. As the lender increased staff members for handling loan requests, its decisions to extend loans also ballooned.
The staffing situation is close to reaching its limit, however, with even private financial institutions becoming maxed out in response to floods of loan requests.
“Since the beginning to April, we have had more visitors at our branches for financing-related consultations,” said an official of a second-tier regional bank.
A senior official of a major bank said, “We’re seeing consultations flowing from government-affiliated financial institutions.”
Securing sufficient staff to cope with the increased workloads has become a major issue for banks that have introduced shift-work systems to reduce the number of employees working at offices as part of their infection prevention efforts.
“Each bank is operating its branches under concerns of infections,” a major bank official said.
As the increase of infection cases in Japan is yet to show signs of slowing down, the business environment surrounding small companies and their financial conditions are getting worse, while the future remains highly uncertain.
“This month, our customer numbers were about 10 percent of what we see on normal days,” said a restaurant manager in Nagano Prefecture. “I wonder how long this will last.”
To keep their loan operations running, financial institutions have been asking customers to avoid visiting their outlets for nonessential purposes and encouraging those wanting to open accounts to use the internet for the related procedures. But such efforts have so far had limited effects in reducing staff workloads.
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