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Methods of Business Financing in Japan


The previous articles introduce four main types of operations in Japan to help people who want to start a business find the best form of business for them.

In this article, we will start a new series to elaborate on the contents of how to raise funds for a business. We will summarize five different methods of business financing and compare them overall. After reading this article, maybe you can find more approaches to get financial assistance in Japan than you think.

1.Public institutions (Japan Finance Corporation)

  • Japan Finance Corporation (JFC=日本政策金融公庫)

The JFC was integrated with The National Life Finance Corporation, the Agriculture Forestry and Fisheries Finance Corporation, the Finance Corporation for Small and Medium Enterprises, and the Japan Bank for International Cooperation (International finance business, etc.) On October 1, 2008. It is a policy-based financial institution that carries out financing within a scope determined by applicable laws and budgets, which are based on government policy for medium- and small-businesses and micro-businesses, agriculture, forestry, and fisheries policy, etc., with the aim to complement financing carried out by private financial institutions.

2.Cooperative institutions 

( Chamber of Commerce and Industry, Shoko Chukin Bank)

  • Chamber of Commerce and Industry(CCI=日本商工会議所)

CCIs are involved in a wide range of efforts to assist smaller businesses, which help sustain the culture and traditions of the area and provide the economic nucleus for many communities. These efforts are aimed at such objectives as strengthening small businesses’ management base (people, goods, money, information), nurturing successors, and promoting management innovation.

  • Shoko Chukin Bank(SDGs=商工中金)

The only government-affiliated financial institution jointly funded by the government and private organizations. It is said to have properties similar to private finance compared to other government-affiliated institutions. While many government-affiliated financial institutions have functions specialized only in loans It offers a wide range of comprehensive financial services, including deposits, issue bonds, short-term financing through bills.

3.Financial institution

(Regional Bank, City Bank, )

A bank is a financial institution that aims to facilitate finance for the general public. Unlike public institutions and cooperative institutions, it is established as a “company” to make profits. 

4.Non-bank financial institution

(Consumer Credit, Credit Card Company, Leasing Company, Venture Capital Company)

Nonbank banks are financial institutions that are not considered full-scale banks because they do not offer both lending and depositing services. Nonbank banks can engage in credit card operations or other lending services, provided they do not also accept deposits. The number of non-banking financial companies has expanded greatly in the last several years as venture capital companies, retail and industrial companies have entered the lending business.

5.Crowdfunding(via Internet)

Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance. Crowdfunding has been used to fund a wide range of for-profit, entrepreneurial ventures such as artistic and creative projects, medical expenses, travel, and community-oriented social entrepreneurship projects. Its use has also been criticised for funding quackery, especially costly and fraudulent cancer treatments

*Warning: DON’T enter the Illegal lending(闇金=Yamikin)market for financing

An illegal loan shark who goes above legally permitted maximum interest rates is called Yamikin, short for Dark Finance (Yami Kinyu, 闇金融), and many of them lend at 10% for 10 days. Illegal money lenders charge a lot more money to lend money and often use violence and threats to get their money back. They do not provide any paperwork and people borrowing money will not know how much they owe or when the repayments will stop. Therefore, for your safety and business prospects, please stay away from this kind of dark market as you can.


Ordinarily, loan conditions become easier in the order of (1) to (4), but interest rates and the requirements of providing security become stricter.

First of all, For (1) public institutions and (2) cooperative institutions, lending is not generally a business activity but rather a part of a public service or as a service for cooperative members. For this reason, loans are offered at interest rates of zero or very low-interest rates that even lower than half of the market interest rate. Besides, if you meet certain conditions, it is possible that you can obtain funds that are not required to be repaid as grants or subsidies. However, to receive these kinds of services, it is generally required to meet application conditions and submit detailed business plans. Of course, the application does not mean that financing can be implemented.

On the other hand, (3) financial institutions and (4) non-banks provide financing as a business, so financing is relatively easy if conditions are met. However, interest rates and commissions are higher than (1) and (2), and guarantors and security are generally required.

With regard to (5) crowdfunding, it can be a fast way to raise finance with no upfront fees. Also, ideas that may not appeal to conventional investors can often get financed more easily. It’s an alternative finance option if you have struggled to get bank loans or traditional funding.

It is common for a corporation to borrow money from a bank, but please confirm financing schemes of public institutions and collaborative organization as well. Because you may get a loan on terms that are absolutely better than the market interest rate.


In this article, we summarize the Japanese financing institutions that support small and medium-sized businesses. I believe you will find that the institution more related to the government, the harder it will be to finance, but relatively, If your application is approved, in fact, you get the government’s support in through the minimum cost. And the more related to civil institution, the easier financing will be, but the higher the risk and the cost of money. In the following articles of this series, we will introduce each institution in detail so that you can choose the corresponding financing method according to your own conditions.

Notes for the readers:

Please use this article only as a reference, not as a legal guideline. Therefore, will take no responsibility or liability, so far as legally possible, for any consequences of your actions. This article is written by Chen Xin, a SUGEE writer, on 7 April 2020.


[1]日本政策金融公庫. (2020). Retrieved 7 April 2020, from

[2]Crowdfunding. (2020). Retrieved 7 April 2020, from

[3]English – 日本商工会議所. (2020). Retrieved 7 April 2020, from

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