ADFIAP International CEO Forum VII
November 18, 2010, Siem Riep, Cambodia
Micro Business and Individual Unit
Managerial Improvement Loan
(MARUKEI Loan)
for
Small Businesses
Taro MORITA
International Cooperation Office
JAPAN FINANCE CORPORATION
Micro Business and Individual Unit (JFC-Micro)
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Micro Business and Individual Unit
Content
1. Introduction of JFC-Micro
2. “MARUKEI Loan” Program
Appendix
1. Collaboration with Business Supporters
2. JFC-Micro’s International Cooperation
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1. Introduction of JFC-Micro
Micro Business and Individual Unit
Establishment of Japan Finance Corporation
National Life Finance
Corporation (NLFC)
(Oct 1, 2008)
Japan Finance Corporation for
Small and Medium Enterprise
(JASME)
Agriculture, Forestry and
Fisheries Finance Corporation
(AFC)
Japan Bank for International
Cooperation (JBIC)
International
financial
operations
JICA
Overseas economic
cooperation operations
Okinawa Development Finance
Corporation (ODFC)
Shoko Chukin Bank
Development Bank of Japan
Japan Finance Corporation for
Municipal Enterprise
(After 2012)
Japan Finance
Corporation (JFC)
For SMEs
Micro Business and
Individual Unit (JFC-Micro)
Small and Medium Enterprise
(SME) Unit
Agriculture, Forestry, Fisheries
and Food Business Unit
Stock corporation
Stock corporation
Japan Bank for International
Cooperation (JBIC)
Abolished
3
1. Introduction of JFC-Micro
Micro Business and Individual Unit
Overview of JFC-Micro
JFC-Micro is one of the units of JFC, and has been providing direct
loans to Micro and Small Enterprises(MSEs) and individuals, which
have difficulties in obtaining enough funds from private sector.
History
1949 Establishment of People’s Finance Corporation (PFC)
1999 Reorganized into National Life Finance Corporation (NLFC)
2008 Integrated into Japan Finance Corporation (JFC)
Organization
Stock corporation wholly owned by the Japanese government
Non-profitable policy-based financial institution
Regulatory body
Ministry of Finance, and other Ministries
Funding
Borrowing from the government, Government guaranteed bonds,
JFC Bonds
Size
Branch offices: 152
Loans
Outstanding
Business Loans to MSEs
6,531 billion yen (=80 billion USD)
Other Loans
961 billion yen
Employees: approx. 4,700
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1. Introduction of JFC-Micro
Micro Business and Individual Unit
Characteristics of JFC-Micro Loan
Borrowers
Micro and small
Borrowers with 9 employees or less: 86.2%
Huge number
1,084,043 borrowers
Wide range
Not focusing on specific industry or region
Loans
Small amount
Average loans outstanding per borrower: 6 mil. yen
Mid or long term 3-7 years: 85.8% , 7-10 years: 8.1% (FY2009)
No collateral
Loans without collateral in number: 78.3% (FY2009)
Start-up support
Start-up loans to 18,478 entrepreneurs in FY 2009
Risk management loan
9.1% (NPL* ratio: 2.7% + Restructured loan ratio 6.4%)
(As of the end of March, 2010)
*NPL = Loans to borrowers in legal bankruptcy + Past due loans in arrears by 3 months or more
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Micro Business and Individual Unit
1. Introduction of JFC-Micro
Comparison with Private Financial Institutions
Number of
Institution(s)
Total number of
SME customers
Loans outstanding
per customer
1,084,043
JFC-Micro
1
Private banks
City Banks and Regional
Banks
144
Credit Associations
Regional small financial
institutions for SME
272
25% of Japanese
enterprises are JFCMicro’s clients.
approx.
2,240,000
(15,555 per institution)
approx.
1,210,000
(4,448 per institution)
6.0 million yen
(74,000 USD)
79.6 million yen
(980,000 USD)
34.8 million yen
(430,000 USD)
(As of the end of March, 2010)
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1. Introduction of JFC-Micro
Micro Business and Individual Unit
JFC-Micro’s Loan Programs
General Loan
This loan is available to MSEs in almost
all industries. Max. loan amount is 48
mil. yen (= 592,000 USD)
Special Loan
This loan is extended in response to
economic and financial policies for
MSEs. Max. loan amount is 72 mil. yen.
(= 889,000 USD)
Ratio of Loans Outstanding
in number (as of the end of
Mar. 2010)
24.0%
53.0%
Managerial Improvement Loan
(“MARUKEI Loan”)
Environmental
Health Business
Loan (EHB Loans)
This loan is available to MSEs
relating to public hygiene, such as
restaurants, barber shops, beauty
parlors, laundries, hotels, etc.
13.8%
9.3%
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
What’s MARUKEI Loan?
MARUKEI Loan was established in 1973. (“MARUKEI Loan” is
popular name of “Managerial Improvement Loan.”)
MARUKEI Loan is a system to financially complement “the
Managerial Improvement and Dissemination Services” for small
businesses implemented by Chamber of Commerce and Industry(CCI)
or Society of Commerce and Industry(SCI).
The purpose of MARUKEI Loan is, by providing small loans, to
enhance the effectiveness of management counseling by CCI or SCI
and realize managerial improvement of small businesses.
MARUKEI Loan is extended by JFC-Micro without taking any
collateral or a guarantor on the basis of recommendation from CCI or
SCI.
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Micro Business and Individual Unit
2. “MARUKEI Loan” Program
Target and Condition
Target of the Loan
Commerce and service business with 5 or less full-time workforces
Manufacturing and other business with 20 or less full-time workforces
Requirements
Getting recommendation from CCI/SCI.
Requirements to get recommendation from CCI or SCI
• Receiving management counseling of CCI/SCI for 6 months or more
• Being in business for one year or longer in the same district
• Fully paying taxes
Terms and conditions
Max. amount
15 million yen ( =185,000 USD)
Payment period
Equipment: 10 years or less,
Collateral
Collateral or a guarantor is not necessary.
Interest rate
0.3% lower than JFC-Micro basic rate
Working: 7 years or less
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
Policy Framework
“Act on Supporting Small Business by CCI/SCI”
“Basic Guideline to CCI/SCI” formulated by the Minister of METI
Other operation
“The Managerial Improvement
and Dissemination Services”
Government
Subsidy
Other operation
MARUKEI Loan
CCI
SCI
Small Businesses
Counseling by Management Counselors on finance, tax,
accounting, labor, transaction, innovation, management,
ICT, environmental measure, etc.
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
CCI and SCI
CCI and SCI are special legal entities aimed at developing regional
commerce and industry.
Chamber of Commerce and
Industry (CCI)
Society of Commerce and
Industry (SCI)
Number
515
1,812
Members
Approx. 1,352,000
Approx. 913,000
Location
Mainly established in large
cities
Mainly established in small
cities, towns and villages
No jurisdictional overlap between CCI and SCI.
Operation
• Counseling and advisory
service for businesses
• Issuing certificate of origin,
etc.
Statutory Law
CCI Act (1953)
• Mainly counseling and
advisory service for small
businesses
SCI Act (1960)
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
Management Counselor
CCI and SCI employ certified
Management Counselors.
Mr. T,
Management
Counselor
of XXX SCI
<Must correspond to any of the following>
• Having received the official training course
• Having experience on management counseling
or business management for a certain period
• Being qualified as CPA, Licensed Tax
Accountant or SME Shindan-shi
I visit small businesses in the region on a
daily basis, and I offer counseling on
various managerial matters. It is called
“Circuit Management Counseling.”
When I am consulted on a
financial matter, I
sometimes recommend to
apply for MARUKEI Loan.
Since I keep close contact with managers
of small businesses, I know well about
their personality, business situations,
human relationship and even their family.
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Micro Business and Individual Unit
2. “MARUKEI Loan” Program
Procedure for the Loan
CCI or SCI
Approval from
the Chairman
Assessment Committee
(4) Recommendation
and application for
the loan
JFC-Micro
Analysis
(3) Recommendation letter, etc.
Management Counselor
(1) Management
counseling
Close Relationship
Approval
(2) Application for
recommendation
(5) Loan
Small Businesses
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Micro Business and Individual Unit
2. “MARUKEI Loan” Program
Results of the Loan
The latest results of the loan
Loans disbursed in FY 2009
Number
42,665
Amount
187,244 mil. yen (2.3 bil. USD)
<Average> 4,389,000 yen (542,000 USD)
Loans outstanding as of the end
of March, 2010
Number
183,436
Amount
418,578 mil. yen (5.2 bil. USD)
Composition ratios by industry (Number of loans disbursed in FY 2009)
Wholesale
Manufacturing
Retail
Service
Construction
Others
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Micro Business and Individual Unit
2. “MARUKEI Loan” Program
Key Concept of MARUKEI Loan
Linkage between managerial support and financial support
CCI/SCI
• Wide network
• Information on regional
small businesses
Close Relationship
Meeting, Seminar,
Information exchange
Management Counseling
Linkage
JFC-Micro
• Fund for loan
• Knowhow on lending
(monitoring, etc.)
MARUKEI Loan
Small Businesses
• Getting no collateral/guarantor loan
• Improving management
CCI/SCI
• Enhancing the effectiveness of
the management counseling
JFC-Micro
• Alleviating the problem of
information asymmetry
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
Frequently Asked Questions (1)
• Does CCI/SCI take management counseling fees from small businesses?
No, counseling is provided without any fees.
• How does CCI/SCI cover the operational cost?
CCI/SCI is operated by annual member fees and government(central
and local) subsidy. Counseling services are offered to non-member
small businesses as well.
• Who takes credit risk of MARUKEI Loan?
JFC-Micro takes all risks. Loan contract is made between JFC-Micro
and small business borrower.
• Does JFC-Micro pay a commission to CCI/SCI?
No, JFC-Micro dose not pay any commissions.
• Does JFC-Micro approve all of the recommendation from CCI/SCI?
No. JFC-Micro can reject the recommendation. However, in reality,
most of them are approved.
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2. “MARUKEI Loan” Program
Micro Business and Individual Unit
Frequently Asked Questions (2)
• What kind of action do JFC-Micro and CCI/SCI take in case of payment
delay?
JFC-Micro monitors borrowers in cooperation with CCI/SCI.
• What does JFC-Micro do in case of default?
JFC-Micro makes every effort for collection. If repayment is not expected,
JFC-Micro will write off the loan.
• Does CCI/SCI take any responsibility for NPL ?
No, CCI/SCI does not have any legal responsibility.
• How about the NPL ratio of MARUKEI Loan compare to other loan ?
Roughly, a little higher than other loan programs. (It is difficult to compare
accurately since the different calculation method is adopted.)
• Are there any possibilities of corruption between Management Counselor and
small business borrowers?
To avoid such situation, JFC-Micro keeps close relationship with CCI/SCI and
checks carefully each recommendation before approval.
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Micro Business and Individual Unit
Appendix 1
Collaboration with Business Supporters
Business Supporters
CCI
SCI
Environmental Health
Trade Association
Close Relationship
JFC-Micro
Management
counseling
＋
MARUKEI
Loan
Managerial advice
on EHB
＋
EHB Loans
Technical support
for entrepreneurs
＋
Business
Startup Loan
Financial and
managerial
advice
＋
General Loan
SMRJ, Local Government
University, College
S
M
E
NPO
Licensed Tax
Accountant
Special Loan
SMRJ: “Organization for Small and Medium Enterprises and Regional Innovation, Japan”
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Appendix 2
Micro Business and Individual Unit
JFC-Micro’s International Cooperation
JFC-Micro has accumulated unique knowhows on Micro and Small
Enterprise finance , such as credit analysis techniques, over the past 60
years. Recently, not a few foreign countries requested JFC-Micro to
transfer its experience, knowledge and techniques. In order to meet these
demands, JFC-Micro established International Cooperation Office in 2001.
Participating in ODA technical assistance
projects by MOF, JICA, etc. in the field of
SME/MSE finance
Dispatching experts to international conferences
and seminars related to SME/MSE finance or
microfinance.
Accepting foreign study groups and dispatching
staff to seminars held in Japan to give lectures.
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Micro Business and Individual Unit
Thank you for your attention!
Contact Us.
International Cooperation Office,
Japan Finance Corporation,
Micro Business and Individual Unit
(JFC-Micro)
<E-mail> morita-t@jfc.go.jp
<Website> http://www.k.jfc.go.jp/pfce/indexe.html
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