japan finance corporationnote: the breakdown is for the total of general loans (direct loans) and...

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Japan Finance CorporationGuide to the Operations of

the Micro Business and Individual Unit

2014

C O N T E N T S

Message from General Manager 2

Overview of Japan Finance Corporation 2

Overview of Business Operations and Financial Characteristics 5

5 Support for Micro/Small Business Operators

7 Great East Japan Earthquake Initiatives

8 Exercise of Safety Net Functions

9 Initiatives in the Growth Strategy Field

13 Collaboration with Chambers of Commerce and Industry, Societies of Commerce and Industry, and International Cooperation

A note on figures used in this Report:1. Figures for which the value is less than one whole unit.

Numbers of items and amounts are rounded down to the nearest whole unit.As a general rule, percentages (%) are rounded down to the nearest first decimal place when less than four and rounded up to the nearest first decimal place when five or more. Therefore, figures in the total column may not match the figure obtained by calculating all individual items.

2. FiguresFigures lower than the unit are shown as "0." "-" is shown when there is no applicable figure.

1 Guide to the Operations of the Micro Business and Individual Unit 2014

Message from

General M

anager O

verview of Japan Finance Corporation

Message from General Manager Overview of Japan Finance Corporation

Message from General Manager

I would like to offer my deepest appreciation for your continued understanding and support of the business operations of Micro Business and Individual Unit of Japan Finance Corporation (JFC-Micro).

In addition to financing in support of micro/small enterprises, we also provide loans intimately related to all phases of life such as educational loans to everyone who requires funding for when their children enter school.

In addition to providing sustained support to corporations/individuals whose financing was affected by the Great East Japan Earthquake, we actively respond to consultations from people interested in areas that lead to growth strategies such as business start-ups, social business, overseas business development and business revitalization.

We will continue striving to fulfill our policy-based financing function - the mission of our organization - as an accessible financial institution for both SMEs and others. I look forward to your continued understanding and support.

Japan Finance Corporation (JFC) is a policy-based financial institution which developed out of the National Life Finance Corporation, the Agriculture, Forestry and Fisheries Finance Corporation and the Japan Finance Corporation for Small and Medium Enterprise.

Basic PhilosophyProfile of JFC

Focused Policy-based Financing

Under the national policy, JFC will provide flexible policy-based financing by utilizing a variety of financing programs and schemes to meet the needs of society, while complementing the activities of private financial institutions.

Mainstreaming Governance

JFC will strive to conduct highly transparent and efficient busi-ness operations based on a high level of corporate governance and hold itself accountable to the public. Furthermore, JFC is committed to becoming a self-governing organization con-tinuously evaluating and improving its activities.

●Total Loans Provided(Billion yen)

0

5,000

10,000

15,000

FY2013FY2012FY2011FY2010FY2009FY2008

5,421.1

10,336.2

6,141.9 6,017.5 5,756.6 5,285.3

Yoshiharu UenoGeneral Manager, Micro Business and Individual Unit

Japan Finance Corporation

◦ Name: Japan Finance Corporation (JFC)

◦ Establishment: October 1, 2008

◦ Statutory Law: The Japan Finance Corporation Act

◦ Head Office: Otemachi Financial City North Tower 1-9-4, Otemachi, Chiyoda-ku, Tokyo, Japan

◦ Governor & CEO: Koichi Hosokawa

◦ Capital, etc.: Capital: 3,709.5 billion yen Reserve fund: 1,870.2 billion yen

◦ Branch Offices: Japan: 152 Overseas representative offices: 2

◦ Employees: 7,364 (budgetary fixed number for FY2014)

◦ Outstanding Loans: 21,107.7 billion yen Micro Business and Individual Unit 7,175.8 billion yen Agriculture, Forestry, Fisheries and Food Business Unit 2,603.7 billion yen Small and Medium Enterprise (SME) Unit 6,354.2 billion yen (finance operations) Operations to Facilitate Crisis Responses 4,911.5 billion yen Operations to Facilitate Specific Businesses Promotion, etc. 62.3 billion yen

(as of March 31, 2014 )

2Guide to the Operations of the Micro Business and Individual Unit 2014

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Overview of Japan Finance Corporation

Major Business Operations of JFC

Operations to Facilitate Crisis Responses and Speci�c Businesses Promotion, etc.●Providing a certain credit to designated financial institutions at the occurrence of crises certified by the competent 　ministers, such as domestic or international financial disorder, large-scale natural disasters, and other similar events.●Providing loans to designated financial institutions based on the Low Carbon Investment Promotion Act.●Providing loans to designated financial institutions based on the Industrial Competitiveness Enhancement Act.

Synergy E�ectSupporting revitalization of local

and regional economiesSupporting business growth

of customersSupporting the globalization

of SMEs

Small and Medium Enterprise (SME) Unit

Operations aimed at SMEs

●Long-term business funds for SMEs●Support for innovation, overseas expansion

and business revitalization●Acceptance of insurance on Credit Guarantee

Corporation (CGC) guaranteed liabilities involving loans to SMEs and micro

businesses

●Small loans for micro/small businesses●Support for business start-ups and regional

revitalization●Educational Loans, and Loans Secured

by Government Pensions, etc.

Scope of operations

Scope of operationsScope of operations

Agriculture, Forestry, Fisheries and Food Business Unit

Operations aimed at agriculture, forestry, fisheries and food business

●Loans for agriculture, forestry, fisheries and food business that foster and support principal farmers●Loans for food industry that support food safety

and security, and close collaboration between agriculture and food industry

●Management support services such as consulting and business matchmaking services

Micro Business and Individual Unit

Operations aimed at micro businesses and individuals

Providing Loans for a Wide Variety of Activities Closely Related to Daily Life, Including Business Financing

Micro/small business operators

People who require educational

�nancing

Those who receive a pension or mutual aid association

pension

●Educational Loans (National Educational Loans)

Provided to parents and legal guardians of students who have entered or are already matriculated at high schools, universities, etc.

●Loans Secured by Governmental Pensions or Mutual Aid Association Pensions, etc.

Provided to people who require funding for housing or businesses, etc.

●General Loans

Management support

●Environmental Health Loans

Financing ProgramsCustomers

Corporations/Individuals in all types of business (may be unavail-able to some people)

Special loans Managerial improvement loans (MARUKEI loans)

Corporations/Individuals involved in businesses start-ups and expand-ing business operations overseas

Corporations/Individuals under the manage-rial advice from Chambers of Commerce and Industry or Societies of Commerce and Indus-try

General loans

General loans Business promotion loans Environmental health improvement loans

Corporations/Individuals engaged in environ-mental health related businesses

Provided to environmental health trade association members who h a v e re c e i v e d a p p ro v a l f o r business promotion plans

Corporations/Individuals receiving m a n a g e m e n t g u i d a n c e f r o m environmental health trade associa-tions, etc.

Consultations on new business establishment

Management consultations

Information sharing


Overview

of Japan Finance Corporation

Supporting Micro/Small Businesses

◦ Business loans have been provided to 0.93 million busi-nesses, most of which were small loans.◦ Approximately 90% of borrowers are busi-

nesses with nine or fewer employees, and ap-proximately half are sole proprietorship.

JFC-Micro Provides Support for Recovery Efforts in the Wake of the Great East Japan Earthquake◦�In the wake of the Great East Japan Earthquake that struck

on March 11, 2011, JFC-Micro has provided support for the

recovery and reconstruction efforts of small

business operators who were victims of the

disaster through the "Great East Japan Earthquake

Recovery Special Loans."

Function as a Safety Net

◦ Supporting the financing of micro/small business operators in response to changes in the manage-ment, financial, and other environments.

JFC-Micro Provides Support to the Growth Strategy Field

◦ The number of loans made to business start-ups (consisting of those that have yet to start and those that are within one year of start-up) reached approximately 22,800.

◦ JFC-Micro supports "social businesses (NPOs, etc.)" that are engaged in solving community social problems.◦ JFC-Micro supports micro/small businesses trying to expand overseas.◦ JFC-Micro supports micro/small businesses engaged in recovery

efforts.

Collaboration with Chambers of Commerce and Industry

◦ JFC-Micro works closely with Chambers of Commerce and In-dustry, to support the management improvement efforts and other activities of micro/small business operators via the "Management Improvement Loan."

International Cooperation

◦ JFC-Micro has provided many countries with know-how and information about SME finance.

JFC-Micro has contributed to the hiring of 84,000 people per year.

As a result...

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●Breakdown of Loans (FY2013)

Number of loans400,000 loans

Amount2,454.5 billion

yen

Special Loans49.1%

Educational Loans28.4%

Environmental Health Business (EHB) Loans (including Managerial Improvement Loans for EHB)2.3%

Managerial Improvement Loans9.6%

Safety-net Loans33.8%

General Loans4.3%

Loans Secured by Governmental Pensions or Mutual Pensions, etc.6.3%

Other Special Loans15.3%

Special Loans77.1%

Educational Loans6.8%

Environmental Health Business (EHB) Loans (including Managerial Improvement Loans for EHB)2.1%

Ordinary Loans(General Loans)5.5%

Other Special Loans20.1%

Managerial Improvement Loans8.1%

Safety-net Loans57.0%

Loans Secured by Governmental Pensions or Mutual Pensions, etc.

0.4%

●Financing Performance of Business Funds

(Billion yen) (Thousand)

Number of loans Amount

0

1,000

2,000

3,000

4,000

0

100

200

300

400

FY2013FY2012FY2011FY2010FY2009FY2008

270 270 260

2,277.12,332.7 2,407.3

310310340

2,605.52,807.5

2,191.3

Note: Figures before FY2008 October are based on data from the former National Life Finance Corporation.


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Overview of Business Operations and Financial Characteristics　Support for Micro/Small Business Operators

Business Loans have been Provided to 930,000 Businesses, Most of which were Small Unsecured Loans

◦The average loan balance per business is 6.79 million yen, most of which were small loans.

Most Borrowers are Micro/Small Business Operators, with Approximately Half Sole-proprietorships

◦� Borrowers are mainly micro/small business operators such as bakeries, restaurants, barber shops and hairdressers, building contractors, and others that have a close relationship with the people in local communities.◦Approximately 90% of the borrowers have nine or fewer employees, and approximately half of them are sole proprietorship.

●Breakdown of Loans by Number of Employees 　(Based on the Number of Loans) (FY2013)

Between 10 and 197.9%

20 or more 3.9%

Between 5 and 920.2%

4 or fewer68.0%

Note: The breakdown is for the total of General Loans and Environmental Health Business Loans (direct loans).

●Breakdown of Loans by Capital, Individual and Corporation 　(Based on the Number of Loans) (FY2013)

Note: The breakdown is for the total of General Loans (direct loans) and Environmental Health Business Loans (direct loans).

Corporation/Capital over 10 million yen6.4%

Corporation/Capital of 10 million yen or less49.6%

Individual44.1%

◦ The percentage of unsecured loans exceeds 70% of the total.

●Breakdown of Loans by Type of Collateral (Based on the Number of Loans)

No collateral76.1%

Secured by collateral23.9%

265,919(FY2013)


◦Number of Business Borrowers and Average Loan Balance per Business (as of end of FY2013)

JFC-Micro Total for Credit Associations (267 credit associations) Total for Domestic Banks (139 banks)

Number of business borrowers (million) 0.93 1.13 2.01

Average loan balance per business (million yen) 6.79 36.38 86.7

Notes: 1. Figures for JFC-Micro are the total of General Loans and Environmental Health Business Loans. 2. Domestic banks include major commercial banks, regional banks, secondary regional banks, and trust banks. 3. Figures for credit associations and domestic banks do not include loans to individuals (loans for housing, consumption, tax payments, etc.), loans to regional public organizations, overseas yen-loans, or loans

made to businesses in foreign countries in name of their domestic branches. Number of business borrowers for credit associations and domestic banks are based on the number of loans.Source: Bank of Japan website


Overview

of Business Operations and Financial Characteristics

JFC-Micro Provides Loans to Nearly All Regions and Types of Business

We provide a wide variety of loans to micro/small business operators in diverse communities and working in all types of businesses through our 152 branch offices around the country.

●Breakdown of Balance of Loans by Region (Based on Amount of Loan) 　(as of end of FY2013)

Notes: 1. Figures for JFC-Micro are the total of General Loans and Environmental Health Business Loans.

　　2. Domestic banks include major commercial banks, regional banks, secondary regional banks, and trust banks.　　3. Figures for credit associations and domestic banks include loans to individuals (loans for housing, consumption, tax payments, etc.), 　　 loans to regional public organizations, overseas yen-loans, or loans made to businesses in foreign countries in name of their domestic branches.Source: Bank of Japan website

0

10

20

30

40

50

6055.3

13.7

19.4

11.4 11.3

6.98.7 9.1

7.04.4 4.1 3.44.0 3.9 2.7 2.2 2.5

29.9

Kanto Kinki Kyushu Chubu Tohoku Chugoku Hokuriku Hokkaido Shikoku

JFC-Micro Domestic Banks(%)

●Breakdown of Balance of Loans by Type 　of Business (Based on Amount of Loan) 　(as of end of FY2013)

Note: The breakdown is for the total of General Loans and Environmental Health Business Loans (direct loans).

Wholesale & retail24.0%

Services22.7%

Construction14.7%

Manufacturing11.5%

Restaurant & Accommodation8.2%

Others18.9%

Borrowers Include a Wide Variety of Micro/Small Business Operators, from Retail Stores with Close Connections to Life in Local Communities to Cutting-edge Companies

Micro/small business operators represent an overwhelming majority of companies of every type and in every field of busi-ness at 87% of the total businesses in Japan.

For example, borrowers include traditional retailers such as local grocery stores and neighborhood contractors, etc. as well as leaders in cutting-edge biological, IT, and other types of know-how and technology. In terms of growth stage, borrow-ers include companies with a short history that are aiming for growth and companies with a solid business.

Borrowers include a wide variety of micro/small business op-erators from companies with a close relationship to local com-munities to companies ready to enter new markets.

■ Inquiries for Business Loans:

Business Loan Consultation Phone Number

0120-154-505Hours of Operation, Monday to Friday: 9 am to 7 pm＊Not available on weekends, national holidays, and during the New Year holidays.

＊You can request a consultation via the website.

Mobile PhoneWebsite

MobileBusiness�Loans

Japan Finance Corporation Search

●Breakdown of Loans by Number of Years in Operation 　(Based on the Number of Loans) (FY2013)

Under 10 years30.6%

10 or more yearsUnder 20 years19.1%

20 or more years

Under 30 years14.2%

30 or more yearsUnder 40 years

11.7%

40 or more yearsUnder 50 years

10.0%

50 or more years14.4%



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Great East Japan Earthquake Initiatives

We Provide Support to the Recovery and Reconstruction Efforts of Micro/Small Business Operators Affected by the Great East Japan Earthquake

JFC-Micro supports the rehabilitation and reconstruction of mi-cro/small businesses that have suffered damage at times of disas-ter such as earthquakes, typhoons and heavy snowfalls, by means of Disaster Loans that have more favorable repayment conditions than regular loans, such as a longer repayment period or a longer grace period for the principal.

In the wake of the Great East Japan Earthquake that struck on March 11, 2011, JFC-Micro has provided support for the recovery and reconstruction efforts of small business operators who were victims of the disaster through the "Great East Japan Earthquake Recovery Special Loans."

Trends in Loans for the Great East Japan Earthquake (Cumulative) (March 11, 2011 - March 31, 2014)A total of 205,552 loans totaling 2,008.4 billion yen have been made to borrowers affected by the Great East Japan Earth-quake between the time the disaster happened and March 31, 2014.

Great East Japan Earthquake Loan, Example No. 1: Support for a New Factory

Company A is located in Fukushima Prefecture. The company manufactures and processes house-hold kitchen supplies as well as commercial kitchen equipment.

Company A's factory suffered significant damage in the disaster, but it remained in operation as a "disaster-stricken factory." In order to handle increased orders from commercial kitchen equip-ment manufacturers and others, the company subsequently acquired new machinery to equip its new factory. Their ability to manufacture high-precision, high-quality goods and automate their operations made 24-hour operation possible. JFC-Micro provided loans that funded the com-pany's capital (facility & equipment) investment by co-financing with a local financial institution.

The new factory

Great East Japan Earthquake Loan, Example No. 2: Support for Transferring Operations to a New Store

Company B is located in Miyagi Prefecture. It is engaged in the wholesale and retail sales of fresh fish caught in local waters. The company's store suffered devastating damage (it was completely destroyed) due to the tsunami, and the owners were forced to continue business operations in a temporary store. They subse-quently found a good location and made arrangements to start operations in a new store. JFC-Micro provided loans that financed the equipment and operation costs related to transferring busi-ness operations to the new store.

The new store

◦Overview of the Great East Japan Earthquake Recovery Special Loans (Portion Handled by JFC-Micro)

Borrowers (Note 1) Credit Ceilings Repayment period (grace period)

Corporations/individuals who directly suffered damage from the earthquake or nuclear reactor disaster 60 million yen

(in addition to all types of financing facilities)

Facilities and Equipment: 20 or fewer years (5 or fewer years)Operation: 15 or fewer years (5 or fewer years)

Corporations/individuals who indirectly suffered damage from the earthquake or nuclear reactor disaster

Facilities and Equipment: 15 or fewer years (3 or fewer years)Operation: 15 or fewer years (3 or fewer years)

Corporations/individuals who suffered other damage due to the disaster (damage caused by harmful rumors, etc.)

48 million yen (Special)(Note 2)Facilities and Equipment: 15 or fewer years (3 or fewer years)Operation: 5 or fewer years(8 or fewer years when required in special cases) (3 or fewer years)

Notes: 1. Limited to those who conduct business and have places of business within specific disaster areas. For information about specific disaster areas, contact the consultation desk of a branch office. 2. Members of Environmental Health Trade Associations whose promotion plans have received approval receive 57 million yen (Special Operation Funding only).

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500

1,000

1,500

2,000

2,500

0

50,000

100,000

150,000

200,000

250,000

●Performance of Loans for the Great East Japan Earthquake (Cumulative) 　 (March 11, 2011 to March 31, 2014)

(Billion yen) (Number of loans)


Note: Loans for the Great East Japan Earthquake include Disaster Loans and Great East Japan Earthquake Recovery Special Loans (cumulative).

27

Sep. 30, 2011 Mar. 31, 2012 Mar. 31, 2013 Mar. 31, 2014

2,008.4

1,443.2

757.4

1,915.4

205,552

76,339

193,322

145,361


Overview


Exercise of Safety Net Functions

JFC-Micro Supports the Financing of Small Businesses Operators in Response to Changes in the Management, Financial, and other Environments

We are meeting the demand for a safety net for micro/small business operators whose financing is affected by deflation and other changes in the social and economic environments.

"Safety Net Loans (including earthquakes)" in FY2013 totaled 138,106 loans. In addition, "Business Support Safety Net Loans (Loans for a Changing Business Environment) in FY2013 to corporations/individuals who had a fixed debt burden and who suffered temporary worsening of their financial condition totaled 8,135 loans.

Overview of Management Support-Type Safety Net Loans (Note 1)

Corporations/individuals who have a heavy debt burden, are under pressure to improve management, and have created a business plan per management direction and advice from an approved management improvement, etc. support organization(Note 2) or JFC are eligible for special interest rates.Notes: 1. Refers to Safety Net Loans and Environmental Health Safety Net Loans.

2. An "approved management improvement, etc. support organization" is defined as a support organization (licensed tax accountant, certified public accountant, small and medium

enterprise management consultant, etc.) that operates under the SME New Business Activities Promotion Law. See the website of the Small and Medium Enterprise Agency for details.

A Special Consultation Desk has been Established to Quickly Handle Consultations from Micro/Small Business Operators

A special consultation desk is immediately established in case of an unforeseen event such as a natural disaster or a major corporate bankruptcy so that affected micro/small business owners can consult about their loan and repayment conditions.

0

50,000

100,000

150,000

200,000

250,000

●Financial performance of Safety Net Loans 　(number of loans)

(Loans)

Note: Performance of the number of Safety Net Loans and Environmental Health Safety Net Loans (including earthquakes) issued to the business operators.

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

141,067

238,041218,438

167,024

138,106156,596

Great East Japan Earthquake in 2011

Effects of the strong yen

Economic downturn precipitated by the Lehman Brothers bankruptcy in 2008

◦Overview of Safety Net Loans

Types of loans Customers Loan amounts Repayment period

Funds for changes in the business environment

Corporations/individuals whose business conditions have been negatively affected by declines in sales, etc.

48 million yen or less Facility & Equipment 15 or fewer yearsOperating 5 or fewer years(8 or fewer years when required in special cases)Funds for changes in the

financial environmentCorporations/individuals who are suffering financing difficulties due to the bankruptcy of their financial institution

Special 40 million yen or less

Funds for bankruptcies of customers

Corporations/individuals who are suffering business difficulties due to the bankruptcy of their customer(s), etc.

Special 30 million yen or lessOperating 5 or fewer years(8 or fewer years when required in special cases)

Note: The same system exists for members of Environmental Health Trade Associations whose promotion plans have received approval (Only for operating loans. Does not include Loans for Customer Bankruptcy).

◦Main Consultation Desks Currently in Operation (as of May 31, 2014)

Number of consultation desks Names of main consultation desks Date of establishment

Disaster-related 11

Special consultation desk for the Great East Japan Earthquake Mar. 2011

Special consultation desk for damage suffered as a result of Typhoon No. 12 in 2011 Sep. 2011

Special consultation desk for damage suffered as a result of heavy rain and severe storm that struck between June 8 and July 23, 2012

Jul. 2012

Special consultation desk for damage suffered as a result of Typhoon No. 26 in 2013 Oct. 2013

Special consultation desk for damage suffered as a result of heavy snowfall that began on February 14, 2014

Feb. 2014

Others 4Special consultation desk for countermeasures against increases in the cost of raw materials and energy Feb. 2014

Special consultation desk for overcoming deflation, etc. Feb. 2014


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Initiatives in the Growth Strategy Field

The Number of Loans Made to Business Start-ups (Consisting of Those that have yet to Start and Those that are Within 1 Year of Start-up) has Reached Approximately 23,000 a Year

Many corporations/individuals who are about to start up a business or have recently started up a business find it difficult to procure funds due to lack of a history of business performance. JFC-Micro actively funds these business start-ups.

Performance of Loans Issued to Start-up Businesses (Number of Businesses)The number of loans made to business start-ups (consist-ing of those that have yet to start and those that are within 1 year of start-up) totals approximately 22,800. 8,483 busi-nesses received loans under the New Start-up Loan program in FY2013. The program provides no-collateral, no-guarantor loans to start-ups that have not yet filed their tax returns for their second business year.

Approximately 84,000 jobs have been created as a result of loans issued to business start-ups. This is a level that is on par with the number of employees at 69 major companies (Note).Note: Calculation based on an average of 1,226 employees at major companies as

reported in the supplementary statistical information of the Small and Medium Enterprise White Paper (2013 edition).

[Job Creation Effects]22,800 companies x average of 3.7 employees (Note) = 84,360Note: The average number of employees at time of business start, based on Survey on Business Start-

ups in Japan (FY2013) by the JFC Research Institute.

JFC-Micro Actively Supports Women, Youth, and Senior Entrepreneurs

The scope of business start-ups is broadening as the economic system becomes more diverse with start-ups by women who take ad-vantage of their ability to notice the small things in daily life, young people who utilize novel ideas in their business start-ups, and seniors who draw on their many years of experience when they establish new businesses. JFC-Micro actively funds these business start-ups.

◦Loans Made to Women, Youth and Senior Entrepreneurs (No. of companies)

Women Youth (aged under 30) Seniors (aged 55 and older)FY2012 FY2013 FY2012 FY2013 FY2012 FY2013

3,724 businesses　→　4,630 businesses 1,718 businesses　→　1,817 businesses 1,659 businesses　→　2,283 businesses

Example of a Loan Issued to a Woman Entrepreneur: Starting Up a Diamond Jewelry Retail Business that Ensures Mining and Processing are Done with Regard to Human Rights and Environmental Concerns

Company C is a jewelry retailer that deals in products that were handled under the "Ethical Diamond" program, which ensures that mining and other processes are carried out without ethical and other problems. The president of the company has experience working in the field of international coopera-tion and started the company based on the idea that the severe conditions in developing countries particularly in Africa where diamonds are mined must be improved. The social significance of support-ing developing countries has received high praise. JFC-Micro provided loans to fund initial purchases of merchandise in stock at the time the company was founded.

A wedding ring with a diamond mined under the Ethical Diamond program

Example of a Loan Issued to a Young Entrepreneur: Spreading Japan's Cute Cartoon Characters Around the World

Company D developed a corporate Facebook page specializing in Japan's cute cartoon characters. The company has created a business model that takes advantage of the 5.7 million followers of its Facebook page to derive income from affiliations with webstores and advertising. It has received praise for its method of popularizing cute Japanese cartoon characters around the world, and has been chosen as a Ministry of Economy, Trade and Industry "Company with an eye for establishing new business and train-ing support personnel." JFC-Micro provided loans to fund operations until sales reached expected levels.

From Company D's Facebook page

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10,000

20,000

30,000

●Performance of Loans Issued to Start-up Businesses 　(Number of Businesses)

(Number of companies)

New Start-up Loan programPrior to or within 1 year of start-up

22,800

19,469

16,465

FY2011 FY2012 FY2013

7,128 7,926 8,483

Note: Women who also qualify as youth or seniors are included in the Women category.


Overview


Example of a Senior Entrepreneur: Restaurant for Senior Interaction

The founders of Company E used the connections they had created during their years in the busi-ness world to establish a restaurant whose aim was to be a network seniors could use to interact. As the customers were to be seniors, it was important to create an atmosphere that was comfort-able for seniors to get together and talk over drinks. They planned to create tie-ups with local community centers in order to expand the scope of their activities. JFC-Micro provided loans that funded facility and equipment costs such as remodeling of the store and the purchase of kitchen equipment, and operation costs such as initial purchases of merchandise in stock. Outside view of the restaurant

JFC-Micro Supports Businesses that Take on the Challenge of Innovative New Technologies

In March 2013, Capital Loans (Provision Scheme for Challenge Support and Capital Enhancement) was established to support business-es such as those conducting research using innovative new technologies.

Financial Performance of Capital Loans

In FY2013 the program provided loans to 101 companies. JFC-Micro actively supports companies such as research and development ven-ture companies that have a large research and development debt burden but at the same time have a high degree of technological skill.

Example of Funds Provided by the Capital Loan: Development of a Low-speed, High-torque, High-output Motor

Company F was founded by six leading engineers formerly employed at motor manufacturers. They are working on developing a low-speed, high-torque, high-output motor. This technology has re-ceived high praise, for example, by being selected for a FY2010 Low-carbon, Job Opportunity Creating Industries Promotion Project grant provided by the Ministry of Economy, Trade and Industry. The tech-nology can be applied to a wide variety of industrial machinery including press machines, injection molding machines, and transport and cargo vehicles. JFC-Micro provided operating loans to provide funds required for product improvement and mass production. A low-speed, high-torque, high-output motor

JFC-Micro Supports Venture Businesses Originating in Universities through Cooperation Between Industry and Academia

Many revolutionary technologies were first developed in university research labs.JFC-Micro cooperates with local universities and acts as a bridge between universities and micro/small

businesses.

Example of Loans Provided to a Revolutionary Company that Utilizes a High Degree of Technical Skill: Providing Funds for Research and Development

Company G is a venture company that originated in a national university. It is involved in the research and development of vaccines and pharmaceuticals that use gene recombination that is effective against infectious diseases and cancer. Because the development of vaccines and pharmaceuticals requires a large number of processes such as basic research, non-clinical trials, and clinical trials, a great deal of time is required before they can be placed on the market and acquire value.

JFC-Micro was involved in consultations and requests for assistance from this company through its university-based industry and academia cooperative organization. As the loan screening process pro-gressed, detailed information was exchanged with the Prefectural Industrial Support Center (JFC had previously entered into a partnership agreement with this center in order to assist with local community revitalization efforts) that supported this company. This company has been spotlighted for its high degree of technological skill and its poten-tial for development as a leading company in its community in the future and for this reason JFC-Micro provided it with funding.

An electron microscope used in vaccine research

A JFC First! High School Student Business Plan Grand Prix

In FY2013 JFC-Micro held the first "Creativity Unlimited: High School Student Business Plan Grand Prix" that accepted entries from high school students from around Japan. 1,546 entries were received from 151 high schools and school visits were made to 82 schools to provide help with the creation of the students' business plans. Finalists from 8 schools gave enthusiastic presentations at the last round of judging, which took place in January 2014. The project presented by students from Uwajima Fisheries High School (Ehime Prefecture), "Presents from the Uwa Sea: Abalone raised by Uwajima Fisheries H.S. using ecologically-friendly methods" won the Grand Prize. The event was widely covered in the media. JFC-Micro is committed to continuing in its effort to increase the number of future entrepreneurs by planting the seeds of entrepreneurship among high school students and other young people.

◦For details, see the JFC website⇒http://www.jfc.go.jp/n/grandprix/

Students at Uwajima Fisheries High School receiving their Grand Prize award

Number of universities with which memoranda for industry–academia

collaboration have been signed46

(As of the end of May 2014)


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JFC-Micro Supports Micro/Small Businesses Seeking to Expand Overseas through Information and FundingJFC-Micro works in cooperation with JETRO, the Japan Federation of Bar Associations, and other specialized organizations that support overseas development to conduct consultation services. Through these relation-ships, we provide information that meets customer needs.

The number of loans provided through the Loans for Overseas Ex-pansion totaled 522 in FY2013. Approximately sixty percent of these loans were issued to wholesalers and retailers. Customers include cor-porations/individuals working in fields that are popular overseas such as Japanese cuisine and local traditional crafts, the so-called "Cool Japan" fields.

●Breakdown of Loans by Type of Business 　(Based on the Number of Loans) (FY2013)

Wholesale & retail58.6%

Manufacturing21.1%

Services13.2%

Others 4.6%

Telecommunications 2.5%

Example of Funds Provided through the Loans for Overseas Expansion: Traditional Crafts to the Children of Lebanon

Company J is a shop with a long tradition (it was founded in 1909) that has been designated by Ono City, Hyogo Prefecture as a dealer in "Banshu abacus," a special traditional craft. It has a wide variety of abacus-related products that it developed using materials and manufacturing technologies used in abacus production. These include board games using abacus beads and cellphone straps.

The company is expanding its overseas sales in places such as Lebanon, which is adopting the use of abacuses in elementary schools as a way to foster their students' mathematical ability and concen-tration. JFC-Micro provided funds to help cover the cost of exporting abacuses. Dice made of abacus beads

JFC-Micro Supports Social Businesses

JFC-Micro supports Social Businesses (Note 1) engaged in solving com-munity issues and which create stable and ongoing employment.

In FY2013 4,987 loans were issued to Social Businesses totaling 44.9 billion yen. Of those, 740 loans (an increase of 115.6% over the previ-ous year) were issued to NPOs totaling 5.8 billion yen (an increase of 118.3% over the previous year), and 4,759 (an increase of 112.5% over the previous year) were issued to nursing care and welfare businesses (Note 2) totaling 43.4 billion yen (an increase of 108.2% over the previous year).

●Financial performance of Social Business-related loans

0

3,000

6,000(Billion yen) (Loans)


0

10

20

30

40

50

3,6934,433

(112.5%)4,987

33.6 41.4(108.6%)

44.9

FY2013FY2012FY2011

Notes: 1. Figures in parentheses represent the comparison with the previous year.

2. Totals for loans issued to NPOs and companies involved in nursing care and welfare services (NPOs that are engaged in nursing care and welfare services are not counted twice).

Loan Provided to Social Business, Example 1: Establishment of an After-school Care service for School Children that Specializes in Nutrition Education

Loan Provided to Social Business, Example 2: Establishment of a Group Living(Note) Facility in a Renovated Vacant Home

Company H operates an after-school care service for elementary school students called "Shokuraku School." The ser-vice is based on the concept of "cultivating the power to make dreams come true through learning about nutrition." It is not only an after-school care service but also serves as a "juku" (private learning center) where students can experi-ence hands-on learning of business administration and learn about nutrition. Each month, students learn about nutri-tion around the world and open a store. Through this experience, students increase their knowledge of history and science and grow as people by improving their communication skills and ability to give presentations. The goal of the service is to provide students with the skills necessary for them to make their dreams come true. JFC-Micro provided loans to help cover the operation costs required to operate the education program and other aspects of this service.

Company I set up a completely barrier-free group living facility in a private home in order to provide a place where single men aged sixty and over could live together. The residents set the house rules through discussion among themselves. People were able to take up residence in the facility without hav-ing to pay rent in advance as a down payment and without having to renew their lease, meaning that the facility could be used for the rest of their lives.

The medical and nursing care needs of residents were met through link-ups with medical and nursing care companies. JFC-Micro provided funding required to cover facility and equipment costs related to the renovation of the building.Note : The goal of small residential group homes is to allow elderly and other residents to realize lifelong self-realization and lead healthy senior years through community

group living that respects individual autonomy and that is available at a relatively low cost. (Source: Alternative Housing & Living Association Homepage)

Shokuraku School class

Barrier-free washroom and bathing facilities that can accommodate wheelchairs

Note :1. A wide variety of social problems exist in local communities, including environmental protection, nursing care and welfare services for the elderly and the disabled, support for child-raising, community revitalization, sightseeing, etc. Social Businesses are organizations that utilize business methods and cooperate with a variety of entities such as local residents, NPOs, companies, and others to solve these kinds of problems in local communities. (Source: Ministry of Economy, Trade and Industry Homepage)

Note :2. Companies involved in welfare and nursing care for the elderly, child welfare, welfare for the disabled, as well as other companies involved in social insurance, social welfare, and nursing care.

Initiatives in the Growth Strategy Field


Overview


Supporting Revitalization in City Centers and Shopping Districts

JFC-Micro Supports Micro/Small Businesses as They Work to Recover

JFC-Micro supports parties working to revitalize city centers and shopping districts by providing loans under programs including the business vitality strengthening fund and the Loans for Modernization of Grocery Retailers, and information to such as local governments.

Through the business reconstruction & business succession sup-port fund, JFC-Micro supports parties undergoing corporate reorganization through involvement of the Small and Medium Size Business Rehabilitation Support Co-operative, approval of reconstruction plans based on the Civil Rehabilitation Act, or col-laboration with commercial financial institutions, and business succession.

With business support managers at 152 branches nationwide, JFC-Micro flexibly responds to requests to have their repayment terms relaxed by temporarily extending principal repayment due dates or reducing monthly payment amounts. JFC-Micro supports business owners working toward administrative improvement by offering support in creating administrative improvement plans and offering advice designed to solve administrative problems.

◦Number of loans to businesses in approved city centers (FY2013):


Total Loans Provided 16,600 139.6 billion yen

JFC-Micro is Strengthening the Support it Provides to the Growth Strategy Field

Business Start-Up Support Desks and Overseas Expansion Support Desks have been Established in the 152 Branch Offices Around the CountryBusiness Start-Up Support Desks provide services in which full-time staff offer advice on business start-up plans to people planning to start up a business and offers a wide variety of information on starting a business.

Overseas Expansion Support Desks offer consultation services on financing and various issues such as required approvals and checking contract details through relationship with JETRO and the Japan Federation of Bar Associations, etc. The Desks provide de-tailed support to meet customer needs.<<The 152 branch offices throughout the country are open weekdays from 9 am to 5 pm. No appointment necessary.>>

Business Start-Up Support Centers and Business Support Plazas have been Established throughout the Country

[Business Start-up Support Centers]◦ Centers are located in 15 regions of Japan from Hokkaido

to Kyushu.◦ Centers provide timely support to customers through col-

laboration with regional organizations that support start-ups.◦ Centers organize diverse seminars targeted at customers in

varying stages of their business cycle, both before and after starting business.

FY2013Number of times instructors were sent to business start-up support organizations, etc.: 385Number of business start-up seminars conducted: 173[Business Support Plazas]◦ In six locations: Sapporo, Sendai, Tokyo, Nagoya, Osaka, and

Fukuoka.◦ Appointments for consultation are available to persons

who plan to start a new business and those who have never used JFC’s services.◦ For those who cannot visit during regular business hours,

weekend and evening appointments are also available (ex-cluding national holidays).

Notes: 1. Sunday consultations are available on first and third Sundays of each month at Tokyo Business Support Plaza.

2. Night consultations are available at Tokyo Business Support Plaza (every Thursday) and Osaka Business Support Plaza (every second and fourth Tuesday).

●Locations (as of June 2014)

Business Start-up Support Centers

Business Support PlazasHokkaido

Tohoku

Kita-Kanto Shinetsu

Tokyo

Minami-Kanto

Tama

Hokuriku

NagoyaKyoto

Osaka

KobeChugoku

ShikokuFukuoka

Kumamoto

◦�Total Loans Provided (FY2013) under the Business Reconstruction and Business Succession Support Loan program


Total Loans Provided 199 3,009 million yen


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Collaboration with Chambers of Commerce and Industry, Societies of Commerce and Industry, and International Cooperation

JFC-Micro Collaborates with Chambers of Commerce and Industry and Societies of Commerce and Industry

JFC-Micro works in close collaboration with regional Chambers of Commerce and Industry, and with Societies of Commerce and Indus-try throughout Japan to support business improvement of micro/small businesses via Managerial Improvement Loans (MARUKEI Loans; unsecured and unguaranteed) and consultation sessions.

Overview of Managerial Improvement Loans (MARUKEI Loans)

Managerial Improvement Loans (MARUKEI Loans) are a program whereby micro/small businesses receiving management guidance, such as from Chambers of Commerce and Industry or Societies of Commerce and Industry, can utilize funds needed for managerial improvement with-out collateral or guarantors. Since the program was established in 1973, it has been accessed for a total of approximately 4.88 million cases.

●Structure of Managerial Improvement Loans 　(MARUKEI Loans)

JFC-Micro Chambers of Commerce

and Industry and Societies of Commerce and Industry

Small Business Operators

LoansConsultation, applicationManagement

guidance

Recommendation

Collaboration

0

10,000

20,000

30,000

40,000

50,000

●Total number of Managerial Improvement Loans 　(MARUKEI Loans) Provided

(Billion yen) (Loans)Number of loans Amount

39,303

154.3

35,159

40,047

172.2

0

100

200

300

FY2011 FY2012 FY2013

198.2

Holding of “One-Day JFC” Consultation Sessions at Chambers of Commerce and Industry and at Societies of Commerce and Industry

Consultation sessions called “One-Day JFCs,” where staff from JFC-Micro consult on finance, are held at Chambers of Commerce and Industry and at Societies of Commerce and Industry. Every year, many micro/small businesses utilize the consultations services.

◦�Number of “One-Day JFCs” held at Chambers of Commerce and Industry and at Societies of Commerce and Industry

FY2011 FY2012 FY2013

2,792 3,021 2,696

Cooperation through Business Start-up and Management Improvement Support Seminars

JFC-Micro actively participates in activities that support local business start-ups and management improvement by co-sponsoring business start-up and management improvement seminars with Chambers of Commerce and Industry and Societies of Commerce and Industry. At these seminars we provide simple explanations of how to create business plans, how to procure funding, JFC's loan programs, and other issues to people interested in starting up a business or moving into a new field. Many of the people who attend these seminars later utilize JFC-Micro loans for business start-ups and management improvement. Community Business Forum for entrepreneurs co-

sponsored with Chamber of Commerce and Industry

JFC-Micro Actively Collaborates with Regional Financial Institutions

JFC-Micro is working to reinforce its collaboration with regional financial institutions that are working to strengthen their relation-ships with the local communities as providers of funds ("relation-ship banking") mainly in the area of start-up support operations.

●Collaborative Loans (Number of loans)

(Loans)

01,0002,0003,0004,0005,0006,0007,000

Cooperative loans

Collaborative loans

FY2013FY2012FY2011

6,6223,798

3,1218601,961

590

Notes: 1. Cooperative loans are loans issued via referral from a �nancial institution. 2. Collaborative loans are loans that are co-�nanced with �nancial institutions.


Overview


International Cooperation

Technical Assistance

Through the ODA project, JFC-Micro cooperates with financial institutions in developing countries which are trying to overcome various challenges, by providing them with know-how about credit analysis for SMEs.

Since June 2011, we have provided technical assistance for Lao Development Bank (LDB) in the field of SME finance in conjunc-tion with the Policy Research Institute (PRI) of Ministry of Finance (MOF), Japan.

This project aims to enhance LDB personnel and to improve its credit operations. We have already held a total of four approxi-mately two-week long seminars in Laos and Japan. LDB employees attended lectures on topics such as credit analysis.

So far, we have implemented similar projects in Vietnam and Malaysia. Laos is the third country.

Period Item Place Contents

June 2011 Conclusion of MOU Laos -Conclusion of MOU for project

November 2011 1st Seminar Laos(3 Cities)

-�Lectures on basic credit analysis and credit management

June 2012 2nd Seminar Japan(Tokyo, Kobe)

- Lectures on credit analysis, credit risk, business start-up support, marketing strategy and human resource development-Site visit on branch offices and their clients

January 2013 3rd Seminar Laos(3 Cities)

- Lectures on credit analysis, case-study, analysis for LDB’s approval documents

August 2013 4th Seminar Laos(2 Cities)

-�Lectures on compliance, case-study and credit management

Cooperation with APEC Financial Institutions Dealing with SMEs

Acceptance of Foreign Missions

To promote cooperation with SME-related financial institutions within the APEC region, JFC-Micro signed an MOU (Note) with 14 financial institutions in the region, including the China Development Bank (CDB) and the Small and Medium Enterprise Development Bank of Thailand (SME Bank). JFC-Micro attends the annual meeting and engages in technical cooperation and information exchange.

Note: Memorandum of Understanding on Cooperation among APEC (Asia-Pacific Economic Cooperation) Fi-nancial Institutions Dealing with SMEs.

A lot of missions from foreign countries including developing countries come to Ja-pan every year to learn Japan’s experience. Approximately 20 missions, such as a part of a training course of JICA, visit JFC-Micro every year to study SME finance. We give them some lectures on our profile, history, loan programs, business start-up support etc.


September 2014This pamphlet is made of recycled paper in accordance with the environmental product standards established in the Act on Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (Green Purchasing Act). This publication has been printed using vegetable oil ink.

Japan Finance CorporationGuide to the Operations of

the Micro Business and Individual Unit

2014

japan finance corporationnote: the breakdown is for the total of general loans (direct loans) and...

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