Affirmative Action by Tokyo Gov — Special Loan Program for Female, Youth and Senior entrepreneurs

Target of this loan program

Tokyo Government is trying to take affirmative action. The applicants of “Special Loan Program for Women, Youth and Senior entrepreneurs” should be WOMEN, YOUTH* or SENIOR* starting a business in Tokyo.

Age

*Youth = under 39 years old
*Senior = over 55 years old

In this aging society, youth ends at 39 years old and senior starts from 55 years old. Basically everyone except for male between 40 years old and 54 years old.

There aren’t many VC/Investor in Tokyo compared to the other startup cities, so Tokyo has various kinds of Loan program for entrepreneurs instead because Tokyo Metropolitan Government really wants to increase the startup rate.

Legal entity

Not only KK (Kabushiki Kaisha) or GK (Godo Kaisha), this loan program is for Sole-Proprietors (個人事業主), General Incorporated Association (一般社団法人), and NPO.

Location

The location of the business or the main office needs to be in Tokyo.

What kind of business?

Any kinds of business that contributes to increase the number of employment and economy in Tokyo.

Criteria

• Up to 15 million yen
• 1% Interest rate
• 10 years of Repayment period
• Up to 3 years of Grace period
• No need of collateral
• No need of guarantors.

Support from “advisors”

Small and Medium Enterprise Consultant (中小企業診断士)

is the main one giving you advise regarding the loan/business planning. Each borrower has the free consultation opportunity for three times in a year for five years.

If the borrower is female or someone doing Social Business, the consultation is up to 5 times in a year.

Tax Accountant (税理士）

also helps how to create financial statement up to two times in a year. They do not create the financial statement on behalf of the borrowers, but they can give you advises.

How to start?

The flow starts from contacting a Credit Union (信用金庫/信用組合) that Tokyo Government collaborates with.

1. Call one of the Credit Union on the second page of this list, and check what kind of Business Planning Sheet they need.
2. Create a Business Plan
   *This loan program does not require any collateral and guarantor, so they will closely look at the business plan to see whether the borrower can repay.
3. Have a meeting with a credit union
4. Meet an “advisor” to get a consultation
   *The advisor will provide some advises on how to improve the business plan.
5. Within 10 days after the consultation, the applicant apply for the loan program
6. Inspection from the credit union
7. Result

In order to make the support from public organizations beneficial,

• Know your specific goal
  - How much loan you need to take out
  - Initial investment of the business or daily operation
  - Why your business will contribute for economy in TOKYO
• Make sure you have enough time
  - Loan programs especially controlled under governmental initiative takes time
  - If you need to get cash urgently, it will be faster to outsource it to a loan consultant
• Understand this program works well especially if your business is attached to the local economy
  - Unlike banks, Credit Unions serve the local economy and the main purpose is growing the local economic value
  - If your business does not put much value on the local economy, it may not a good fit

The Government collaborate well with Credit Unions

In Tokyo, the collaboration between the Government and banks rarely works.

First of all, the purpose of banks is how to make profit out of all the streamline of cash management as a private sector. Some Mega-Banks have branch all over Japan (and even in abroad), so it does not care much about the physical location. However, the government is not supposed to raise profit from any projects, so the objective of the banks and the government is different.

Secondly, Credit Unions only accepts residents or business owners of a certain area to become the member, and its objective is maximize the benefit for the members. Credit Unions are organized by non-profit organizations, so the main purpose of its activity is based on developing the local economy. Not raising profit like banks.
(Reference: https://www.shinkin.org/shinkin/difference/)

That being said, I guess the government has hard time collaborating with private banks and most of the loan programs that the government takes initiative is relating to Credit Unions, not banks.

Loan — the most popular fundraising method in Japan

Many international entrepreneurs think of VC and Investors when they think of “fund raising”, but Japanese SMEs grew Japanese economy by taking out a loan from financial institutions for the past half century.

Though the new startup mainstream is taking over the traditional business culture, Japanese economy still largely depends on the relationship with financial institutions. Most of the decision makers in large institutions or corporations are in 50s or 60s, and their business knowledge is rooted on loan programs, not VC or Investors.

But if your business is closely connected to Japanese local economy and needs cash, loan programs are the way to go.