CREDIT GUARANTEE SYSTEM IN JAPAN

Location of 52 Credit Corporations HOKKAIDO AOMORI CREDIT GUARANTEE SYSTEM IN JAPAN AKITA TOYAMA ISHIKAWA YAMAGATA GIFU GIFUSHI FUKUI SHIGA KYOTO NAGANO NIIGATA IWATE MIYAGI HYOGO TOTTORI OKAYAMA SHIMANE HIROSHIMA YAMAGUCHI FUKUSHIMA TOCHIGI GUNMA IBARAKI SAITAMA CHIBA TOKYO KAWASAKISHI KANAGAWA FUKUOKA SAGA NAGASAKI YOKOHAMASHI YAMANASHI OSAKAFU OSAKASHI OITA TOKUSHIMA KAGAWA MIYAZAKI KAGOSHIMA KUMAMOTO SHIZUOKA AICHI NAGOYASHI MIE 26 NARA WAKAYAMA KOCHI EHIME Credit Corporation OKINAWA NATIONAL FEDERATION OF CREDIT GUARANTEE CORPORATIONS (NF) 313,Kyobashi,Chuoku,Tokyo 1431, Japan Phone No.8133271721 Fax No.81332727364 26

1 Objectives of Credit Corporation Credit Corporation (hereinafter referred to as "") is public institutions established under the Credit Corporation Law. There are 52 s in Japan, one in each of Japan's 47 prefectures, and five in major cities. They were established to make it easier for Small and Medium Enterprises (hereinafter referred to as "SMEs") to raise funds from financial institutions by providing guarantees on business loans s do not provide loans out of business, and thus to contribute to sound business development in these enterprises with in each territory. Each of s has been independently engaged in business activities to support local SMEs, responding to the specific needs of its own region as well as promoting a standardized guarantee system. One important goal of these s is to boost economic progress in Japan by supporting SMEs in establishing creditworthiness, and thus to help them expand their businesses. The overall objectives of s in the Japanese economy are stated in the "Basic Objectives of Credit Corporations" guidelines: 1 Benefit Credit Corporation's Basic Principle SMEs striving to maintain, establish, and develop operations CONTENTS 1. Objectives of Credit Corporation 1 2. History of Credit System 2 3. The Credit Supplementation System 4 1) Credit System ( Flow of Operations ) 2) Credit Insurance System 3) Eligible Small and Medium Enterprises 4) Ceiling on s 2 3 4 Help them to establish creditworthiness by evaluating their managerial capabilities, and facilitate funding by providing credit guarantees backed by a public institution Assist in reinforcing their bases of operations by responding flexibly to a diverse range of needs including consultation, analysis, and the provision of information By these actions, contribute to the prosperity of such enterprises and promote strong regional economic development. 5) Credit Fee 6) Organization of Credit Corporations Number of Offices Number of Staff 4. Role of National Federation of Credit Corporations (NF) 8 5. The Activities of s in Fiscal 25 9 6. Funding of Credit Corporations 11 7. Financial Support from the Government and its Effects on SMEs 12 Supplement13 1

2 History of Credit System The credit guarantee system in Japan dates back to the establishment in September1937 of of Tokyo. The was funded by 156 members including the Tokyo Metropolitan Government, commercial and industrial organizations, and financial institutions. During the 193's, Japan's industrial and financial sectors were caught up in the Great Depression, the effects of which had spread across the world. SMEs were particularly severely hit by the resulting economic turmoil, and had great difficulties in raising funds, due to there being insufficient funds allocated for SMEs at financial institutions, higher funding costs, and a credit crunch that stemmed from low creditworthiness among small enterprises. The government thus found it necessary to take immediate measures to ease funding for SMEs in order that they could continue in business. The government took several measures to deal with this crisis. First, it provided financial institutions with the funds necessary to allocate loans to small enterprises; second, it reinforced the functions of those financial institutions that had been designed to deal with small businesses; third, it implemented a system designed to prevent credit restrictions on small enterprises by enhancing their creditworthiness. Specifically, the government introduced a "loss compensation system," in which the government compensated those financial institutions that the government had designated to handle loans to small enterprises for losses incurred under specific circumstances. In reality, however, the number of loans extended to small businesses was limited, since collateral was required as a precondition for a loan. Under these circumstances, there were growing calls for the government to set up a public institution to act to boost the creditworthiness of SMEs. Against this backdrop, the concept of a "credit guarantee institution" emerged, an institution that in principle provides credit guarantees backed by public funds. Following these moves, a detailed study was launched in 1935 to prepare for the setting up of Japan's first modern credit guarantee institution. of Tokyo was established in 1937, followed by one in Kyoto in 1939, and another in Osaka in 1942. Japan's business activities declined during World War II, and the crisis confronting s brought their operations virtually to a halt. After the war, the role and importance of the credit guarantee system reemerged because of the urgent need to revive Japan's economy and to rebuild her warshattered cities. In the efforts to support the revitalization of Japan's economy, additional s were established one after another in many areas across Japan. In 1953, the Credit Corporation Law was enacted, and this established the public status of as a governmentbacked corporation. Together with this came increasing calls to satisfy the rapidlygrowing demand for funds by small enterprises, and with it an urgent need to improve and extend the creditworthiness of SMEs, and to strengthen their ability to offer collateral. This resulted in a review of the conventional "loss compensation system," leading to the enactment of the Small Business Credit Insurance Law in 195, making it possible for the government to directly insure loans to SMEs using government funds. In 1951, moreover, the Small Business Credit Insurance Law was partially revised, and credit insurance was used for the credit guarantees provided by s. This led to the current "Credit Supplementation System", a system that combines credit guarantees with credit insurance. Small Business Credit Insurance Corporation was established in 1958 as a public corporation designed to reinsure guarantees of obligation by s. The establishment of and injection of public funds into s have both contributed to the improvement and development of the Credit Supplementation System. In July 1st 1999, the Small Business Credit Insurance Corporation, the Japan Small Business Corporation, and the Textile Industry Restructuring Agency were combined to establish the Japan Small and Medium Enterprise Corporation (JASMEC). And, in July 1st 24, Japan Finance Corporation for Small and Medium Enterprise (JASME) inherited the Credit Insurance Programs which were operated by JASMEC. Since their founding, s has provided guarantees through "indirect financing": it has guaranteed the business funds needed by small businesses, enabling these to borrow the funds from financial institutions. However, based on the December 1999 revision of the Credit Corporation Law, s have also begun providing guarantees by "direct financing," whereby they guarantees corporate bonds (only those that are offered through private subscription) issued by SMEs, etc. In December 21, the guarantee for loans secured by accounts receivable was launched as one of the government's measures against economic deflation. This is the first partial guarantee system for SMEs except bond guarantee in Japan, and the aim of the system is supporting the diversification of SMEs' fund raising. In December 22, the Business Rehabilitation System, which was also partial guarantee system, was launched to support the legal rehabilitation of SMEs, in view of the severe situation of frequent occurrence of SME bankruptcy. In June 25, Japanese government settled on the policy of the reform of the Credit Supplementation System in order to make it sustainable, considering its huge amount of deficit after the financial crisis in 1998. Since April 26, the variable guarantee fee rate system, which we think unprecedented in the world, has been adopted and is expected to be a good incentive for SMEs to improve their business management. Furthermore it enables s to offer lower fee rates to the lower credit risk SMEs and to expand the opportunity for higher credit risk SMEs to use the guarantee Program. BRIEF HISTORY OF THE CREDIT GUARANTEE SYSTEM 1937 of Tokyo established in Setember 1937. of Kyoto established in Kyoto prefecfure (1939), and 1942 of Osaka in Osaka City (1942). 45s established one in each of 45 prefectures, as well as 4 s 1947 in major 4 cities; Yokohama, Kawasaki, Nagoya, and Gifu. Therefore, there are 51 s in Japan. (Subsequently, Okinawa Prefecture was 1951 added, resulting in 52 s at present.) The Small Business Credit Insurance Law enacted ~ ~ 195 1951 1953 1958 National Association of Credit Corporation (after his name was changed "National Federation of Credit Corporations") established. The Credit Corporation Law enacted Small Business Credit Insurance Corporation (after his name was changed "Japan Small and Medium Enterprise Corporation " in 1999 and his name was also changed " Japan Finance Corporation for Small and Medium Enterprise " in 24) established 2 3

3 The Credit Supplementation System The Credit System in Japan is characterized by two functions: 1) a "Credit " function that enables to guarantee financial institution against risks associated with loans to SMEs, and 2) a "Credit Insurance" function in which Japan Finance Corporation for Small and Medium Enterprise (JASME) funded by public money reinsures these credit guarantees. The combination of these two functions is known as the "Credit Supplementation System," as illustrated in the following chart. 1) Credit System Flow of Operations The following illustration shows the process of preparing a credit guarantee, from application by SMEs for their business loan to issuing the credit guarantee certificate, awarding the loan, payment under guarantee (subrogation), and loan repayment. Local Governments Subsidies for 'S fund National Government Ministry of Finance Ministry of Economy, Trade and Industry (Small and Medium Enterprise Agency) Financial Institutions 5. Loan repayments 4. Loans 1. Loan applications SMEs Supervision Supervision Subsidies for compensation assets Supervision Contributions / Loans Credit Corporations (52 s) Compensation for the loss National Federation of Credit Corporations (NF) Loans Insurance contracts Loan fund Small business credit Insurance reserve fund Japan Finance Corporation for Small and Medium Enterprise (JASME) Deposits 1. Applications for credit guarantee 3. Issue of credit guarantee certificates 6. Requests for payments under guarantee 7. Payments under guarantee (Subrogation) 1. Credit guarantee applications 2. Creditworthiness checks 4. Payment of guarantee fee 8. Rights of indemnity established 9. Loan repayments (fund recovery) Joint s Contract Credit Consignment Contract Bond Holders (Investors) s Financial Institutions Loans Repayments SMEs Bond Issue 4 5

1. There are two ways for SMEs to apply to s for credit guarantees. One is to apply through financial institutions and the other is to apply directly. 2. Upon receipt of an application, carries out credit checks on the enterprise. 3. If approves the application based on the credit checks, it issues a credit guarantee certificate to the financial institution. In the case where receives an application for a credit guarantee directly from a SME, arranges for a financial institution to extend a loan to the company. After obtaining loan approval from the financial institution, issues a credit guarantee certificate. 4. The financial institution extends a loan to the enterprise based on the credit guarantee certificate. The enterprise pays a guarantee fee to. 5. SME makes loan repayments to the financial institution in accordance with the terms and conditions of the loan. 6. In the event that SME is not able to make all or part of the repayments within the term, the financial institution requests for payment under guarantee (it is called subrogation). 7. makes repayments on the loan to the financial institution on behalf of the enterprise. 8. Because payment has been subrogated, obtains a right of indemnity against the enterprise. 9. recovers the right of indemnity from the enterprise, while assisting SME to rebound. 2) Credit Insurance System When approves a credit guarantee and a loan is extended by a financial institution based on that approval, the loan is automatically insured by JASME. For this insurance, pays a credit insurance premium to JASME. If makes payments under guarantee to the financial institution, the claims 7%9% of the subrogated amount from JASME. If subsequently collects the subrogated payments from SME, is required to pay part (7%9%) of the money collected to JASME. This insurance system plays a key role in protecting the solvency of s and strengthening their creditworthiness. 3) Eligible SMEs s define the scope of SME eligible to receive credit guarantees as follows. SMEs which either meet the requirements in terms of number of regular employees or paidup capital as given in the table below are eligible for credit guarantees (excluding some special industries). INDUSTRY Manufacturing, etc. Wholesale Retail Services Industries covered by the credit guarantee system are based on the industries designated by the enforcement regulation under the Small Business Credit Insurance Law. Agriculture, forestry, fisheries, financial industry, religious organizations, and nonprofit organizations are excluded. 4) Ceilings on s Ceilings on guarantees for SMEs are as follows: General s s without Collateral Bond s CAPITALIZATION Up to 3 million Up to 1 million Up to 5 million Up to 5 million INDIVIDUALS / CORPORATIONS 2 million 8 million 45 million NUMBER OF EMPLOYEES 3 or less 1 or less 5 or less 1 or less COOPERATIVES, ETC. 4 million 8 million Besides the above, many special guarantees have been established based on government measures, and ceilings are set on these guarantees as appropriate. 5) Credit Fee A variable fee rate system based on credit risk of SMEs has been introduced since April 26, as one of the new measures of our system reform. The guarantee fee rate, which is owed by a SME, is basically decided in 9 criteria from.5% to 2.2% based on the credit score of applicant SME calculated by Credit Risk Database (CRD) system. In addition, max.1% discount can be applied if the applicant SME meets the certain requirements. The guarantee under national or local government policy and guarantee in small amount are operated with smaller guarantee fee rate than the basic rate. 6 7

4 Role of National Federation of Credit Corporations (NF) 6) Organization of s Number of Offices TYPE OF OFFICE Branch Local Office Number of Staff TYPE OF STAFF Executive Officers Staff Male Female FY1999 151 5 FY1999 235 5,937 4,452 1,485 FY2 152 FY2 235 5,967 4,488 1,479 FY21 153 FY21 237 5,984 4,529 1,455 FY22 FY22 FY24 Objectives The objectives of NF are: to promote sound development of s, in order to contribute to smooth funding for SMEs Business Activities 1. Surveys and research designed to improve credit guarantee business 2. Surveys and research on financing SMEs 3. Compensation for the loss of s that manage specific guarantee systems 4. Being liaison among s and JASME, and provision of guidance and advice to s 5. Submission of recommendations, reports and information to related ministries and agencies 6. Information exchange and cooperation with financial and economic organizations 7. Other activities deemed necessary to achieve NF's purposes 152 238 5,944 4,524 1,42 FY23 149 FY23 238 5,856 4,495 1,361 149 FY24 237 5,778 4,434 1,344 FY25 15 FY25 237 5,762 4,414 1,348 5 The Activities of s in Fiscal 25 Due to the delay of business recovery, compared with the largescale enterprises, the business environment surrounding SMEs remained unpredictable in fiscal 25. In this environment, s sought to aggressively and appropriately address the diversifying guarantee demands of SMEs, while at the same time dealing flexibly with the matter of altering repayment conditions. In these ways they contributed to the financial stabilization of SMEs. On the other hand, due to such factors as an increase in cases of subrogation, conditions in the business environment of s became unprecedentedly severe. Thus, in order to strengthen their indemnity right management and recovery system, the s, in April 21, established the Credit Servicer Inc.*1, with which they worked to efficiently and effectively recover indemnity right. (Results) 1) The number of guarantee approvals by the s in fiscal 25 decreased 7.3% compared to the previous fiscal year, to 1.14 million cases, while the amount of the guarantees decreased 1.4%, to 12.9 trillion yen. Thus, at the end of the fiscal year, there was 3.4 million cases of outstanding guarantee liabilities (93.3% compared to the previous fiscal year) with the amount of 28.7 trillion yen (96.8%). Of these amounts, the outstanding guarantee liabilities related to the Special System for the Financial Stabilization of Small Businesses accounted for 1.14 thousand cases (3.3% of the total) and73.2billion yen (2.4%). 2) The cases of subrogation decreased 17.5% compared to the previous year, to 1 thousand while their amount decreased 17.5%, to 836.8 billion yen. 3) The amount recovered was 3.3 billion yen, down 6.3% from the previous year. (Of this amount, 46.8 billion yen was recovered by the Credit Servicer Inc) (Topics) 1) June 26, Japanese government settled on the policy of the reform of the Credit Supplementation System in order to make it sustainable, considering its huge amount of deficit after the financial crisis in 1998. The core measures of this system reform are the adoption of a variable guarantee fee rate system based on the estimated credit risk of SMEs' and a partial guarantee system. As this system reform has been considered from a view point of not only improving its income and expenditure balance but also improving its value in the society, other measures such as the one for s' assistance to SMEs' business management and turnaround and the one for the improvement of transparency of s' management are also under way in addition to the above new systems. 8 9

2) In order to contribute to the financial stabilization of SMEs, s have focused particular effort in the following areas. (1) In order to enable SMEs to raise fund by the new means of using their accounts receivable, which is an unemployed asset that they own, the guarantee system for loans secured by accounts receivable was established in December 21, and s sought to inform their customers about the system, disseminate it, and promote the use of its guarantees. Approved guarantees in fiscal 25: 16,574 cases of guarantees: 12.5 billion yen (2) The guarantee system over the loans for repaying a guaranteed loan (established in February 23). (A flexible approach was taken as regards altering SMEs' repayment conditions.) Cases: 24,638 : 3.293 billion yen (3) Great effort was exerted in connection with business stabilization guarantees (safety net guarantees), which are provided to SMEs for which obstacles to business stabilization have arisen as a result of: applications for reorganization, etc., by their trading partners and the consequent restrictions on their own business activities; disasters; the bankruptcy of correspondent financial institutions; etc. Cases: 89,298 (65.6% compared to previous fiscal year) : 1.55 trillion yen (71.5%) 3) s use the SME Credit Risk Database(CRD) positively and seek dual aim of breaking free from SME financing dependent on real estate collateral and refining and accelerating guarantee investigation operations by using CRD. *1 Credit Servicer Inc. With unsecured indemnity right increasing, the national government has established and revised laws and ordinances necessary for strengthening indemnity right recovery operations. Based on this, 52 s, in April 21, jointly funded and founded the Credit Servicer Inc. a collection company that conducts indemnity right management and recovery operations focused mainly on unsecured indemnity right related to the SGSF thus expanding and strengthening their indemnity right recovery system. *2 SME Credit Risk Database (CRD) Under the leadership of the Ministry of Economy, Trade and Industry and the Small and Medium Enterprise Agency, the SME Credit Risk Database (CRD) began operating in April 21. Its purpose is to improve the current fundraising environment, in which SMEs without collateral can not readily procure capital, by establishing an information infrastructure that enables financial institutions and investors to make reliable assessments of the credit standing of SMEs. As the organization for running this system, the CRD Operating Council was established, with 52 s, 2 government financial institutions, and 4 private financial institutions comprising its core. As of April 26, the members of the CRD Operating Council was changed to the CRD Management Council, included 52 s, 4 government and 131 private financial institutions, with all being actively engaged in operating the system. 6 Funding of Credit Corporations Basic Assets The basic assets that form the basis of the creditworthiness of s consist of funds and reserves. There are two sources of funds: supporting contributions, which s collect from local governments, financial institutions, and industry organizations, and standard contributions from financial institutions. Supporting contributions from the financial institutions to s are treated as taxdeductible under the law. Reserves are the balance of yearly income and expenditure carried over into a reserve fund. The overall ceiling on the total amount of guarantees that each is allowed to provide is set as a certain multiple of its basic assets, and is currently between 35 and 6 times the value of the basic assets. Basic assets at the end of March 26 were as follows: (BREAKDOWN) Basic Assets Fund 1,364 billion Funds 431.8 billion Local Governments 66.4 billion (Accumulative) Special Fund for the Financial Financial Institutions 158.5 billion Stabilization 56.1 billion Reserves 875.9 billion Industry Organizations.8 billion (Accumulative) Notice Approximately half of the contributions from local governments were contributions by way of the national government. Borrowing In addition to the basic assets, part of s' funds is borrowed from national government through JASME, and local governments. The borrowed money is deposited with financial institutions in order to help for Basic Assets expand guaranteed loans to SMEs. The average amounts of outstanding borrowings during fiscal 25 were as follows. BORROWED FROM: JASME Local Governments AMOUNT 473 billion 1,137.5 billion 1 11

12 7 Financial Support from The Government and its Effects on SMEs JASME While the operations of s are financed primarily by the guarantee fee and capital gains on s' assets, the national and local governments also provide financial support to the credit guarantee corporations to promote their operations and enhance the management base. 1.Loan fund borrow funds from JASME and deposit them with financial institutions to help expand guaranteed loans to SMEs. JASME extends loans to s from its own loan funds. 2.Small business credit insurance reserve fund When s make payments under guarantee to financial institutions, they are paid the benefits from the insurance contract that they hold with JASME. Small business credit insurance reserve fund forms the source for the payment of these insurance benefits. 3.Subsidies for 's funds From a view point of easing the financial impact from the reform of credit supplementation system to s and enhancing the smooth realization of the reform, the government has granted 'Subsidies for 's Fund' directly to the s, which had been formerly granted through the local governments, since fiscal 25. With this change of treatment, s could spend this Fund for the compensation of their loss. In spite of this change, local governments continue their financial assistance to s as before. 4.Deposits s deposit money borrowed from JASME and local governments and part of their own funds with financial institutions. These deposits increase the total deposits at financial institutions, leading to an expansion in the number of guaranteed loans and a reduction in lending rates. 5.Compensation for the loss The national government provides NF with compensation for the loss and makes its fund, and NF contributes it to s according to their subrogation so that s are able to respond flexibly to specific demands for credit guarantee by SMEs. This compensation for the loss is for middlesized companies that borrowed from the financial institutions which went bankrupt and for SMEs which faced financial difficulties due to natural disasters or the bankruptcies of their business relations' companies and banks. Loan fund Small business credit insurance reserve fund Borrowing National Government Deposits NF s Financial Institutions SMEs Subsidies for compensation assets Compensation for the loss Loans Subsidies for s' funds Borrowing Contributions Local Governments 1. Statistics FY 1996 1997 1998 1999 2 21 22 23 24 25 FY 1996 1997 1998 1999 2 21 22 23 24 25 FY 1996 1997 1998 1999 2 21 22 23 24 25 1,562,514 1,67,959 2,235,638 1,669,584 1,631,783 1,31,184 1,32,51 1,382,71 1,229,488 1,14,9 Acceptance of Case Compared rate 2,55,196 2,85,739 2,181,752 2,222,1 2,189,191 2,13,441 2,,197 1,864,75 1,757,754 1,653,776 151,665 152,759 289,666 187,776 196,335 132,258 14,427 151,964 131,629 129,82 Case 47,521 52,395 71,75 76,371 14,759 126,194 138,488 119,93 97,422 8,368 Number of companies using guarantees 98.2 1.7 189.6 64.8 14.6 67.4 16.2 18.2 86.6 98.6 Averaged in 1 case (1 thousand) 971 95 1,296 1,125 1,23 1,16 1,63 1,99 1,71 1,139 Payment under Number of SMEs 5,72,922 5,72,922 5,72,922 4,836,764 4,836,764 4,836,764 4,689,69 4,689,69 4,689,69 4,689,69 4,223 4,987 6,984 8,1 1,733 12,35 12,64 1,217 8,279 6,871 3,789,779 3,928,782 4,459,155 4,71,372 4,694,217 4,565,987 4,386,362 3,944,998 3,737,942 3,489,22 use rate (companies) Outstanding Liabilities Case Compared rate 292,2 295,589 419,917 43,191 414,597 37,12 331,885 311,22 297,433 287,964 12. 11.2 142.1 12.4 96.4 89.3 89.7 93.7 95.6 96.8 (Unit : 1 million,%) 2,15 2,91 2,361 2,647 2,778 2,888 3,194 3,346 3,23 3,3 Averaged in 1 case (1 thousand) Notice 1. use rate (companies) = Number of companies using guarantees/number of SMEs 2. use rate (total monetary amount) = Outstanding guarantee liabilities/outstanding loans to SMEs 3. The number of SMEs is surveyed once every 5 years. For fiscal 23, the number from the fiscal 22 survey was used 4. The number of companies using guarantee has quoted from the data of JASME until the fiscal 23. From the fiscal 24, the number from the data of NF is used 4.5 41.1 43. 45.9 45.3 43.5 42.7 39.8 37.5 35.3 Outstanding loans to SMEs 3,683,47 3,617,533 3,463,361 3,322,85 3,376,227 3,162,934 2,929,46 77 752 942 915 883 811 757 788 796 (Unit : 1 million,%) Recovery of Payment (Monetary unit : 1 million) use rate (total monetary amount) 7.9 8.2 12.1 12.9 12.3 11.7 11.3 *Computing became impossible with change of the statistics method. 13

2. Services of Credit in recent 1 years (Charts) ( 1 million) 3, 25, Acceptance of ( 1 million) 45, 4, 35, Outstanding Libilities 3. Results for General s and the SGSFS s Item Application of Case Case Fiscal Year 24 compared rate 1,319,512 88.3 147,842 84.7 1,229,488 88.9 25 ( Unit : 1 million,% ) compared rate 1,23.361 91.2 141,958 96. 1,14,9 92.7 2, 15, 3, 25, 2, Acceptance of Case ( ). 131,629 86.6 ( ). 3,737,942 94.8 ( ). 129,82 98.6 ( ). 3,489,22 93.3 1, 5, 15, 1, 5, Outstanding Liabilities Case ( 327,54) 56.6 297,433 95.6 ( 14,6 ) 48.1 97,422 81.2 ( 113,698) 34.7 287,964 96.8 ( 7,32 ) 48.2 8,368 82.5 1996 1997 1998 1999 2 21 22 23 24 25 1996 1997 1998 1999 2 21 22 23 24 25 Payment under ( 25,39 ) 64.1 8,279 81. ( 14,688) 58. 6,872 83. Payment Under Recovery of Payment ( 1,946 ) 58.9 ( 1,133 ) 58.2 ( 1 million) 12, 11, 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, ( 1 million) 3,5 3, 2,5 2, 1,5 1, 5 Recovery of Payment Income of fee Profit (Incomeoutgo) 3,24 95.7 ( 516 ) 87.8 3,2 12.3 339 1,33.8 Notice 1. SGSFS stands for the Special System for the Financial Stabilization of Small Businesses. 2. The deadline for applications for SGSFS guarantees was March 31, 21. The totals for the SGSFS guarantees that were handled during the year are given in the table below. 3,3 93.7 ( 439 ) 85.1 3,115 13.1 526 155.1 Totals for SGSFS s Handled (Through End of March 26) (Unit: 1 million) Application of Acceptance of Outstanding Liabilities Payment under Cases 1,893,856 1,723,873 113,698 216,65 Recovery of Payment 1996 1997 1998 1999 2 21 22 23 24 25 1996 1997 1998 1999 2 21 22 23 24 25 341,113 289,437 7,31 22,916 2,82 14 15

4. The transition of the Basic assets Fund Item Basic assets Fund Fund Special Fund for Financial Stabilization Reserves Financial assistance (total) Local governments Prefectures Fiscal Year Cities, towns, villages Financial institutions (financial assistance + burden charges) Trade associations 1999 2 21 22 23 1,38,363 375,997 23,975 8,392 665.997 553,298 83% 474,86 71% 79,212 12% 111,874 824 17% 1,46,718 413,96 183,193 81,429 73,96 577,838 82% 491,927 7% 85,911 12% 124,433 18% 1,4,233 423,274 167,572 89,388 725,793 585,95 81% 497,882 69% 88,68 12% 139,18 19% 1367,46 42,236 13,619 816,19 741,144 593,872 8% 53,784 68% 9,88 12% 146,447 2% 1344,548 422,944 96,497,16 752,87 6,37 58,667 91,667 151,676 8% 68% 12% 2% 24 1,343,79 428,966 67,898 846,845 761,193 65,359 512,519 92,84 155,1 Notice Fractions have been rounded off, so the totals for the various items do not necessarily agree with the amounts in the Total column. 5. The transition of Loan fund etc. from National Government Fiscal Year 1958~199 Total 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 Item Notice Includes revised budget. Loan fund (total) 4,584 23 (4,787) 418 (5,25) 1,77 (6,282) 195 (6,477) 81 (7,287) 95 (7,382) 95 (7,477) * (7,477) * (7,477) * (7,477) * (7,477) (7,477) (7,477) (7,477) (7,477) Insurance reserves 4,754 136 1 1 146 335 1 182 3,298.2 3,365.2 5,987.62 1,698.45 4,37.6 972 3,647.9 92 Subsidies for compensation assets of NF 8 127 174 434 12 12 12 8% 67% 12% 2% ( Unit : million ) 25 1,363,743 431,799 56,66 875,878 765,675 66,367 512,962 93,45 158,483 8% 67% 12% 21% ( Unit : 1 million ) Subsidies for fund of s (total) 299 28.5 ( 327.5) 27 ( 354.5) 27 ( 381.5) 32.5 ( 414) 113 ( 527) 27 ( 554) 9 ( 644) 2,23 (2,874) 1,65 (3,939) 173 (4,112) 54 (4,166) 55 (4,221) 42 (4,263) 42 (4,35) 42 (4,347) Directory of 52 Credit Corporations Postal Code ADDRESS Phone No. Hokkaido Aomoriken Iwateken Miyagiken Akitaken Yamagataken Fukushimaken Niigataken Ibarakiken Tochigiken Gunmaken Saitamaken Chibaken Tokyo Kanagawaken Yokohamashi Kawasakishi Yamanashiken Naganoken Shizuokaken Aichiken Nagoyashi Gifuken Gifushi Mieken Toyamaken Ishikawaken Fukuiken Shigaken Kyoto Osakafu Osakashi Hyogoken Naraken Wakayamaken Tottoriken Shimaneken Okayamaken Hiroshimaken Yamaguchiken Kagawaken Tokushimaken Kochiken Ehimeken Fukuokaken Sagaken Nagasakiken Kumamotoken Oitaken Miyazakiken Kagoshimaken Okinawaken (6867) 141,Odorinishi,Chuoku,Sapporo (11)2412231 (38541) 241,Shinmachi,Aomori (17)7231351 (262) 62,Nagatacho,Morioka (19)65415 (9814) 21612,Honcho,Aobaku,Sendai (22)2256491 (1923) 147,Kyokuhokunishikimachi,Akita (18)863911 (99858) 1161,Jhonancho,Yamagata (23)6472245 (96853) 12,Mikawaminamimachi,Fukushima (24)5262331 (951864) 1471,Kawagishicho,Niigata (25)2671311 (3181) 2235,Sakuragawa,Mito (29)2247811 (328618) 314,Chuo,Utsunomiya (28)6352121 (37126) 331,Otemachi,Maebashi (27)2318816 (33968) 175,Sakuragicho,Omiyaku,Saitama (48)6474711 (26851) 42,Chibaminato,Chuoku,Chiba (43)247731 (14847) 2617,Yaesu,Chuoku,Tokyo (3)32722251 (228558) 6351,Sakuragicho,Nishiku,Yokohama (45)6817118 (231855) 22,Yamashitacho,Nakaku,Yokohama (45)6626621 (2124) 166,Nisshincho,Kawasakiku,Kawasaki (44)21153 (435) 221,Iida,Kofu (55)23597 (38838) 5975,MinamiNaganoAgatamachi,Nagano (26)2347288 (42871) 54,Otemachi,Shizuoka (54)252212 (45315) 79,Tsubakicho,Nakamuraku,Nagoya (52)4545 (468) 418,Sakae,Nakaku,Nagoya (52)2415311 (5853) 51453,Yabutaminami,Gifu (58)2768123 (58813) 2,Meitokucho,Gifu (58)2654611 (5143) 3399,Sakurabashi,Tsu (59)229621 (938565) 213,Sogawa,Toyama (76)4233171 (92918) 925,Oyamacho,Kanazawa (76)2221511 (91884) 281,Nishikida,Fukui (776)3318 (5286) 21,Uchidehama,Otsu (77)51113 (61542) 17,Higashinakamizucho,Saiin,Ukyoku,Kyoto (75)3147221 (5418548) 436,Minamihonmachi,Chuoku,Osaka (6)62447121 (54153) 145,Honmachi,Chuoku,Osaka (6)62617 (651195) 621,Naniwacho,Chuoku,Kobe (78)39339 (638668) 1632,Horencho,Nara (742)33551 (648158) 39,Junibancho,Wakayama (73)4232255 (6831) 2123,Honmachi,Tottori (857)266631 (69853) 15,Tonomachi,Matsue (852)21561 (78732) 21223,Noda,Okayama (86)2431121 (738691) 327,Kaminoborimachi,Nakaku,Hiroshima (82)22855 (7538654) 4516,Chuo,Yamaguchi (83)92139 (768661) 22211,Fukuokamachi,Takamatsu (87)85161 (7792) 25,Nishishinmachi,Tokushima (88)622217 (7891) 31314,Kamimachi,Kochi (88)8233261 (798651) 412,Ichibancho,Matsuyama (89)9312111 (8128555) 221,Hakataekiminami,Hakataku,Fukuoka (92)41526 (848689) 1235,Matsubara,Saga (952)244341 (858547) 41,Sakuramachi,Nagasaki (95)8229171 (868551) 313,Anseimachi,Kumamoto (96)3253221 (8726) 3164,Kanaikecho,Oita (97)5328348 (8884) 223,Miyatacho,Miyazaki (985)241 (892821) 91,Meizanmachi,Kagoshima (99)223271 (916) 312,Maejima,Naha (98)863532 National Federation of Credit Corporations (1431) 313,Kyobashi,Chuoku,Tokyo (3)3271721 16