Photo by Matthew Henry on Unsplash

All of my clients are startups.
Most of them were incorporated 2–3 years ago.

We didn’t have much revenue on the first year because they need to find clients.

Many clients didn’t take it seriously to start making deals with us if we didn’t have a legal entity, so we had to incorporate.

It takes at least two years to earn stable income to sustain the business.
Some entrepreneurs successfully generated revenue, but we have fixed fee.

To grow faster, we need a team. Nobody can keep doing a volunteer work, so we need to pay for them.

To grow faster, we need to hire smart talents who can find the shortest way to finish tons of tasks, so we need to make a promise to them to grow together.

We need cash.

Although startups successfully built a business model that keeps generating a stable income, they are in need of cash especially after covid19 hit our business.

We are all scared of our business status 3 month later.

I support applying for loan programs with my clients because the loan providers ask the applicants to submit several paperworks. The criteria of loan programs was changing almost every week, but it’s almost settled now.


There are tons of criteria that the governmental consultation desk side does not fully understand. Here is the basic criteria for most of the loan programs under government initiative in order to cover the damages of covid19.

Sales dropped by over 5% compared to :
1. the sales in the same month in the last year
→ for SMEs operating a business for over a year
2. the sales in the past three months
→ for ventures and startups operating a business for less than a year

Main players

Main players for loan programs under governmental initiatives are as follows.

  • Japan Finance Corporation (JFC) 日本政策金融公庫
  • The Shoko Chukin Bank, Ltd. (Shoko Chukin) 株式会社商工組合中央金庫
  • Ward Office (ku-yaku-sho) 区役所

Financial Service Agency (金融庁), Guarantee Unions (信用保証協会) and the other institutions are getting involved with financial measures, but I would say these three main players are practically working.
Let’s take a look at one by one.

Japan Finance Corporation (JFC)

is the largest public financial institutions that provide loan for small business owners. The interest rate (for this year) is 1.11%, and it is one of the lowest interest rate among all the financial institutions.

Under covid19, the government support 0.9% of the interest, so all the applicants who meet the criteria (5%+ sales decrease) can take out a loan with 0.21% interest (1.11–0.9).

In addition, the government is trying to offer 0% interest, so eventually most of the applicants can take out a 0% interest for the next three years. (Criteria frequently changes, so we need to keep tracking the latest information. This number is the latest as of May 11th, 2020.)

The Shoko Chukin Bank, Ltd. (Shoko Chukin)

is a half-public / half-private institution that provides loan for companies. The interest and criteria are pretty similar to JFC right now, and the interest rate is dropping just like how JFC does.

JFC and Shoko Chukin target anyone who operates a business under legal entity for more than three months.

Ward Office (ku-yaku-sho)

helps loan facilitation so that SMEs can easily talk with private banks or credit unions about loan programs. Ward Office supports “facilitation (斡旋)” process so it does not directly provide loans.
If the sales is dropped by 5%, we should have an interview with Ward Office and get a document that proves Ward Office offers facilitation to private financial institutions on behalf of our companies.

Ward Office targets companies and sole-proprietor who operates a business in the same ward for over a year.

So what’s the issue?

I see many SMEs and startups are not eligible to get these loans with low interest or even the facilitation process.

The criteria of financial measures for companies with covid19 damages is 5% sales drop, but startups need to grow the sales all the time.

According to the criteria, ventures and startups are those operating a business for less than a year. So if the business is older than 1 year, all the owners need to look at the sales data in the same month in 2019.
For example, if we have the latest sales number in April 2020, the number that we can compare is April 2019. If the “company” is quite early stage, the sales is usually zero.

Again startups need to grow all the time, so the sales cannot go down.

Definition of STARTUPS

There are many governmental initiatives trying to support startups, but not many people have worked in a startup or built a startup by themselves.

Without having any experiences growing a project or a business by spending own money from our pocket, how can we know why startups need to get cash, find clients, and build the business?

Many Japanese entrepreneurs can decide to start a business as a sole-proprietor and see the business growth for a while. Non-Japanese entrepreneurs who need visa have restriction of activity, so they need to create a company to stay in Japan regardless of the sales strategy.

Can we simply define “startups” the companies operating a business for less than a year?

Feel their feelings

Talking with many entrepreneurs, I always listen to their frustration especially if they are stressed out with the time restriction and financial challenge.

Entrepreneurs ask me “All the process is chicken-and-egg. I have no idea where to start.”
Consultants tell them “It’s not my field. Ask the other consultants.”

Entrepreneurs ask me “I cannot open a bank account.”
Bankers tell me “We need to consider about politically exposed person (PEP).”
Have you ever thought of the situation being treated like a criminal all the time?

Entrepreneurs ask me “I was planning to take out a loan two months ago, but nothing was going forward.”
Consultants tell them “This is a part of governmental project, and we cannot help further.”

Startups make decisions right away, and the speed is 10x, 20x, or 30x faster than how corporate world operates the business. While horizontally structured organizations are taking time to make decisions, this entire process is shortening the lives of startups.

It’s already May.

The Government started to proposing financial measures around the end of March, but the criteria keeps changing, and we are running out of money.

By the way, we haven’t received a mask yet.



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