One barrier to opening a new business in Japan is the convention of requiring a ‘management guarantee’ — a third-party guarantor who is legally obligated to repay the entirety of the business loan if the company falls through. This affects startups proportionately higher than other businesses, since they are often untried and disruptive by nature. Foreign entrepreneurs are especially impacted by management guarantees, since they usually don’t have an established network on which they can lean.

To combat this, on 11 June 2024 Iwate Prefecture announced a supplementary budget proposal to establish a new fund lending system that does not require a management guarantee. The scheme is in line with the national program to reform lending practices and aims to promote the establishment of start-up companies. The draft budget includes 270 million yen for the costs required to establish the scheme.

The new loan system will be launched as one of the prefecture's institutional loan schemes and eligible companies that meet the requirements will be able to receive loans at low interest rates. The proposed fund totals 2 billion yen.

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