This summary of the RIETI Policy Symposium held on May 29, 2025, covers the progress of the Business Owner Personal Guarantee Reform Program and initiatives by financial institutions.
Key Points
1. Current Status and Results of Personal Guarantee Reform
- Over 50% of new loans in the first half of FY2024 achieved "lending not dependent on personal guarantees"
- Combined total of "lending not dependent on personal guarantees" and "loans with guarantees that provided appropriate explanations and records" reached nearly 100%
- Supervisory guidelines revised through the "Business Owner Personal Guarantee Reform Program" established in December 2022
- Lending practices by financial institutions not overly dependent on personal guarantees are steadily taking root
2. Case Studies of Advanced Financial Institutions
- Hokkoku Bank: Implemented "in principle, no personal guarantees required" policy 10 years ago, with 92% unsecured loans recently
- Seibu Shinkin Bank: Maintains 70% loan-to-deposit ratio, nearly 70% of SME clients report profits
- Branch managers actively engaged in business evaluation tend to rely less on personal guarantees
- Digital and AI implementation achieves cost reduction in business understanding and productivity improvement
3. Benefits of Personal Guarantee Reform
- For businesses: Enables new challenges, reduces risks of large-scale capital investments, smooth business succession, mental stability for business owners
- For financial institutions: Deepening trust with customers, expansion of new lending opportunities, joint efforts to improve financial structure
- For regional economy: Promoting corporate growth, improving returns for the entire region
- Increased applications for business reconstruction subsidies (1,000 cases at Seibu Shinkin Bank)
4. Future Challenges and Directions
- Challenges for business owners: Insufficient appropriate accounting practices, lack of awareness and determination for guarantee removal
- Challenges for financial institutions: Building follow-up systems after guarantee removal, fostering understanding among field staff
- Urgent need to improve awareness of Business Owner Personal Guarantee Guidelines
- Necessity for three-party cooperation among business owners, financial institutions, and certified support organizations
5. Alternative Disciplinary Measures
- Possibility of discipline through covenants (agreements between companies and financial institutions)
- Building relationships through continuous monitoring and dialogue
- Importance of early-stage business improvement and reconstruction support during normal times
- Utilization of support systems such as trainee training programs by SME Revitalization Councils
The article concludes that establishing lending practices not dependent on personal guarantees is not merely about removing guarantees, but is an important reform that enables financial institutions and businesses to grow together and leads to regional economic revitalization.