Japan's newly approved 1 trillion yen ($9.6 billion) bailout for companies impacted by the novel coronavirus arrives as most small businesses limp along on just a month's worth of cash.
The latest financial aid measure, announced Tuesday, will extend low- to zero-interest loans to small and midsize businesses suffering decreased sales, as well as self-employed individuals in a similar crunch.
But the unsecured loans will be disbursed by the Japan Finance Corp., which takes weeks to issue the financing after the initial application.
"The average small to medium-size enterprise has access to only about one month of funds on hand," said Nobuo Tomoda, a director at credit reporting agency Tokyo Shoko Research.
The government is working to speed up the approval process, but it remains a fight against time since most businesses hurting for funds close their annual book at the end of this month.
At least eight companies have gone bankrupt due to the coronavirus, Teikoku Databank reported Wednesday. The disease delivered a final blow to businesses that were already struggling, the Tokyo-based research firm said.
Ai Travel, a Hiroshima bus tour provider, filed for bankruptcy Tuesday at a local court. The company had been squeezed by grueling competition before the coronavirus hit.
For a food provider in Ibaraki Prefecture north of Tokyo, the school lunch business came to a virtual standstill amid the wave of school closures. Those sales account for 30% of its revenue.
At the end of January, the government opened more than 1,000 points of contact to help businesses address the coronavirus fallout. These locations are run through institutions such as the Japan Finance Corp. and Shoko Chukin Bank, two state-backed lenders.
As of Monday, consultations had been provided on more than 30,000 cases, with 90% concerning cash flow. The number of cases shot up roughly 90% over five days.
On Wednesday, the Ministry of Economy, Trade and Industry opened its own consultation center targeting small-to-midsize companies.
The COVID-19 outbreak has hurt businesses in many industries, from tourism to food services to manufacturing.
