Did you know that the advantage of holding a Startup Visa is not only having 1–2 years to set up a business, but also being able to take out a loan with less interest rate at Japan Finance Corporation?
What is Japan Finance Corporation?
Japan Finance Corporation (JFC) is a public corporation wholly owned by the Japanese government, established on October 1, 2008, as the result of the merger of four policy-based financing institutions. (Official Website)
JFC has been the biggest supporter for Small and Medium Enterprises (SMEs) during the Covid-19 recession and for entrepreneurs who have just started new businesses.
According to JFC,
The number of loans disbursed to business start-ups (consisting of those that have yet to start and those that are within 1 year of start-up) in FY2019 totaled 25,242. It is estimated that about 91,000 jobs were created annually as a result. (Reference)
A special program for Startup Visa holders?
JFC offers a special loan package for those starting startups while holding the Startup Visa.
The interest rate ranges from 1.91% to 2.70% (as of May 31st, 2022), and most founders use the loan program to tentatively fill the gap between the time when a company’s money is set to run out and when the company can expect to receive an infusion of funds later on.
FAQ
1. Do I need Permanent Residency status to apply for a JFC loan?
No, you can apply for a JFC loan program as long as you have an eligible residential status to operate a business. This also includes the Startup Visa.
2. Is the repayment period tied to my residential status period?
Most startup founders can only acquire 6 months to 1 year of residential status as a Business Manager Visa holder until they can prove a continuous revenue stream and profit to qualify for longer terms between renewals.
The short answer is — No. You can set the repayment period beyond the residential period that your residence card shows as long as you can also prove the possibility of renewing your visa status.
3. Is it impossible to apply for a loan if I cannot speak Japanese?
No, you can apply for a loan program available at Japan Finance Corporation even if you cannot speak Japanese. Just like the other procedures, it is definitely easier to go through the entire process including documentation if you can read, write, and speak Japanese, but knowing Japanese is not a requirement.
The inspection flow is as follows:
- Submit documents including applications, financial statements, and business overview
- JFC inspects the documents
- JFC calls you to schedule the interview date
- You visit one of the JFC branch office and have interview
- Result
When you visit one of the JFC branch offices, you can bring a translator who can fill the communication gap between a JFC officer and you. The translator has to sign a paper to responsibly handle the interview process, but you can choose your own translator. No certificate is required for the translator.
4. Can I take out a loan to cover the 5 million JPY capital in order to apply for a Business Manager Visa?
No. Financially speaking, a loan falls under the category of liability and is considered as “debt” whereas capital falls under equity.
Side note : if you received an investment from an investor and your company is a Kabushiki Kaisha (KK, stock company), equity finance applies and you receive cash into your bank account in exchange for stocks. Investment, therefore, falls under equity and you can count the investment as capital.
STARTUP HOKKAIDO offers free consultations for startup founders, and we have some time slots available for consultation with JFC members!
The consultation is free of charge, so don’t hesitate to stop by!