SUBSIDY TIME!

The Japanese Government, the Small and Medium Enterprise Agency, Ministry of Health, Labor and Welfare, and the other multiple organizations start offering subsidies for Small and Medium Enterprises (SMEs) based in Japan in spring. Most of the subsidy programs are offered in spring and autumn, and major applicants get accepted in spring, so don’t miss this opportunity.

Which one should we choose?

There are over 2,000 kinds of subsidy programs all over in Japan and it’s hard to find the best one, so I will list up some of the popular subsidies in terms of the amount of budget and how much costs we can cover.

Before getting started…

The eligible applicants who can apply for the subsidy programs are as follows.
- Small and Medium Enterprises based in Japan
- Sole Proprietors based in Japan
(major programs are offered to SMEs, and some programs allow sole-proprietors to apply)

Each subsidy program has different criteria, and the acceptance rate varies from less than 20% to over 90% based on how much budget a subsidy office prepares. If the office prepares too much budget, the acceptance rate is close to 100% as long as the applicants meet the criteria. Some of the popular subsidy programs are very competitive because everyone wants it, and the acceptance rate is only 20–30%.

Know the basics of eligibility

Though your company is a SME, there are some exceptions.

  1. Received too much fund from a large corporations

Since most of the programs aim for supporting SMEs, those that received main part of the initial investment from a large corporation are sometimes not eligible to apply. The government assumes that these SMEs are already receiving enough support from the corporation.

2. Those who wants to cover the expenses that have already spent

Many entrepreneurs ask me a questions “I want to apply for this subsidy due on April 2020. Can I cover the expenses that I have used by March 2020?”

The answer is NO. All subsidy programs only allow SMEs to cover the expenses that they spend AFTER they passed the subsidy program. Therefore, all applicants need to prepare the financial plan — which month they need to buy additional equipments, how much it does cost, and what the alternative plan is if they wouldn’t be able to pass the subsidy program — are you intend to expand your business even though you cannot get the subsidy?

3. Overlapping the use of the subsidies

For risk-hedging, we think of apply for two subsidy programs so that we might be able to cover the expense with one program even if we lost another one. However, it is considered as a fraud if we get accepted for both of them. The best way is separating all the expenses, defining the purpose to use the subsidies, and applying for different subsidies to cover different expenses.

READY?

The major subsidy programs are all listed below, but please read the bullet points as follows.

  • The criteria of each subsidy program changes every single year, and we can only read the details after the application period starts.
  • Meeting all the criteria does not mean we can pass the application. Again some programs only accept 20% out of the all applicants.
  • Although a subsidy offers 1 million yen to each applicants, that doesn’t mean the applicant can definitely get 1 million. Based on the financial plan and the judgement from the subsidy office, the actual amount that you can receive might be reduced by half.
  • We can receive subsidies AFTER we spend all the expense, so most of us end up with taking out a loan to cover the expense first, and get paid back from a subsidy office. The acceptance letter from a subsidy office will help the probability to take out a loan.
  • The applicants are supposed to pay for all the planned expenses within the designated period that the subsidy office decides. That’s sometimes 3 months, sometimes 1 year.
  • All applicants who pass the subsidy programs are supposed to report the result to the subsidy office for the next 3–5 years, and they need to keep all the records (invoices, receipts, all the applications, etc.)
  • The information below is based on the latest update as of March 15th, 2020.

List of the Popular Subsidy Programs

These programs are offered for SMEs based in all over Japan.

  1. 小規模事業者持続化補助金
    Subsidy to sustain business activities for Small Enterprises
    https://seisansei.smrj.go.jp/pdf/0102.pdf
    * Subsidy amount = up to 500,000 JPY
    * Subsidy covers 2/3 of the expenses
    (to get 500,000 JPY, create a plan to use 750,000 JPY in total)
    * Application period = until March 31st, 2020
    (planned to have application periods in June, October and February)
  2. IT導入補助金
    Subsidy to increase productivity of SMEs by installing a new system
    https://seisansei.smrj.go.jp/pdf/0103.pdf
    * Subsidy amount = from 300,000 JPY to 1.5 million JPY
    * Subsidy covers 1/2 of the expenses
    * Application period = until March 31st, 2020
    (This subsidy is changing the original plan because of Covid-19, and it will most likely adds another application period with different criteria)
  3. ものづくり・商業・サービス補助金
    Monozukuri Subsidy (Subsidy to develop system and product)
    https://seisansei.smrj.go.jp/pdf/0101.pdf
    * Subsidy amount = up to 10 million JPY
    * Subsidy covers 1/2 of the expenses
    (for Small Enterprise, the coverage could be up to 2/3)
    * Application period = March 31st, 2020
  4. 時間外労働等改善助成金
    Subsidy for telework switch
    https://www.mhlw.go.jp/content/11909000/000605120.pdf
    * Subsidy amount = up to 1 million JPY
    * Subsidy covers 1/2 of the expenses
    * Application period = May 29th, 2020
  5. 雇用関係助成金
    Labor related subsidies
    * Too many criteria, so stay tuned for the upcoming blogs!
  6. 創業助成事業
    Subsidy for entrepreneurs
    * For those operating a business for less than 5 years
    * Applicants need to be based in TOKYO
    * Subsidy amount = up to 3 million JPY
    * Subsidy covers 2/3 of the expenses
    * Application period = April 21st, 2020
    * Applicants will need to go through an interview
  7. 新製品・新技術開発助成事業
    Subsidy for developing new technologies/products
    * Applicants need to be based in TOKYO
    * Eligible industries are Robotics, Crowd-computing, or related industries with cutting-edge technology
    * Subsidy amount = up to 15 million JPY
    * Subsidy covers 1/2 of the expenses
    * Application period = April 6th, 2020

Supports for SMEs damaged their business by COVID-19 outbreak

The Japanese government tries to help SMEs undergoing this tough situation, and plans to offer 1.6 trillion JPY for SMEs. This budget will most likely go to a loan program under Japan Finance Corporation, and if your business is damaged by this outbreak, it’s better to take this opportunity.
Most of the governmental offices are still under the process of figuring out the best way to provide the fund, so let’s see how it goes.

As everybody asks… how much is the consultation fee?

Usually business consultants ask in total of 10% of what the subsidy applicants apply.
Up to 10,000 JPY for the first consultation, 5% prepayment out of the amount that you applied (because they need to process tons of paperworks), and the other 5% out of the amount that the applicant received will be charged as the success fee.

One thing that I want to solve through my business is the unclear pricing of “business consultants” or “legal specialists” because many of my friends were struggling to get information and pay for what they asked — some offices ask an client to pay for 1 million JPY for company registration process, but no startup can pay for that amount.

Going through some cases with my clients, I found that Notary Officers or Legal Affairs Bureau do not accept some special or unusual contents on the documents, and there are not many parts on the documents that an “advisor” can improvise. Of course some of them are very knowledgeable and good, but I see most of the time my clients are overcharged.

In addition, most of the information including administrative procedures and subsidy/loan programs are provided only in Japanese, with difficult explanation that even Japanese native speakers cannot easily read.

The only hurdle is language barrier

Many international entrepreneurs want to get subsidies, and they are worried whether their acceptance rate is different from Japanese native speakers. Personally I don’t think so, and the only reason that we don’t see many international entrepreneurs’ name on the accepted applicant lists is the language barrier because there’s no information in English.

Many of my clients are worried — will my visa affect the application?
I don’t think so as long as you are staying in Japan legally and operating your business properly.

So, let’s try. The only way that we can globalize Japan is to try and apply a new case by ourselves.

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