How To Get A Business Loan In Japan For Foreigners [Guide]

Need a business loan in Japan? We have the how-to guide for you.

Understanding business loans in Japan

Getting a business loan might be similar to the process in your home country. Just in case, we’ll go over everything you need to know about business loans in Japan.

Where do you get a business loan in Japan?

Yes. It is possible to get loans for foreigners.

There are three loan options to get a business loan in Japan.

1. Traditional bank loans

Banks are a type of loan service that can offer a mortgage loan, a housing loan, and an investment loan for real estate in Japan.

While banking in Japan is not the easiest for foreigners, getting a bank loan in Japan for foreigners is possible!

Businesses must have a strong credit history, details of their business plans, and accredited documents.

Interest rates, repayment periods, and the loan amount will vary depending on the Japanese bank.

2. Government-backed loans

Japanese government-back loan programs are affordable financing options for businesses in Japan.

a) Japan Finance Corporation (JFC) Startup Loans

The Japan Finance Corporation is a government-affiliated financial institution that offers loans for startups, and small to medium size businesses in Japan. This type of loan can cover startup expenses, such as initial capital investment, product development, and marketing efforts.

b) Small and Medium Enterprise Agency (SMEA) Loans

Under the Ministry of Economy, Trade, and Industry (METI), the Small and Medium Enterprise Agency offers loans and financial support to small and medium-sized enterprises (SMEs).

Their loans are for business expansion, equipment purchase, research and development, and other growth initiatives.

3. Alternative financing options

In addition to bank and government-backed loans, businesses in Japan have these alternative financing options.

a) Crowdfunding

ReadyFor is a popular crowdfunding platform in Japan

While not a business loan in Japan, crowdfunding allows businesses to have funds from contributions, often through online campaigns.

Through crowdfunding, businesses can launch new products or complete community initiatives.

b) Venture capital and private equity funding

Venture capital firms and private equity investors can finance startups and well-established companies in exchange for ownership.

Their knowledge of specific industries can offer funding for business expansion, product development, and market strategies.

Qualifications for getting a business loan in Japan

When getting a business loan in Japan, you need these requirements.

1. Correct legal status and residency requirements

Loan applicants will need the correct legal status and residency requirements.

Having permanent residency boosts your chances of receiving a loan, but you can still receive a business loan without permanent residency.

For a bank business loan in Japan, businesses need to be registered entities such as Kabushiki Kaisha or Godo Kaisha. 

Some banks will require the loan applicant to have legal residency to obtain a loan. Non-permanent residents can still obtain a business loan if they have the correct visa status, such as a startup visa, business manager visa, or investor visa.

A stable bank account and a good credit history with a card loan will strengthen your application.

Additionally, it is recommended that a fluent Japanese speaker accompany for better and smoother communication.

2. Business registration and documentation

Banks usually require business documentation to hand out loans. It will include proof of registration, certificates, business licenses, and company hankos. 

These documents are proof of your business's legal existence when looking for financing. 

Additionally, for any foreign-owned business, you will need to show passports and residency cards to verify your legal status in Japan.

3. Creditworthiness and financial history

Banks will ask for your financial history, credit scores, and repayment capacity to see if you can repay the loan. Additionally, the banks may ask for balance sheets, income statements, and tax returns.

With a strong credit history, stable income flow, and profitability, you will have a high chance of loan approval.

How to apply for a business loan in Japan

What to consider before applying for a loan

Consider the purpose of the loan, how much you need, and the repayment terms so that it aligns with your business goals.

The application process

You will submit the necessary documents with the application to each loan provider you choose.

You can submit your application online or in person, but you'll also need to include:

• Passport or residence card

• Residence certificate (juminhyo)

• Incorporation documents

• Business license or registration certificate

• Company seal (hanko)

• Financial statements such as a balance sheet, income status, and tax return documents

Each bank and loan provider has slightly different document requirements.

The loan processing and approval will vary depending on the lender as well.

In closing

Securing a business loan in Japan as a foreigner can be daunting, but with the right knowledge and preparation, it’s entirely possible. Remember to explore the options you have for your business goals in Japan, keeping in mind factors such as the interest rate to ensure the best financial decision for your venture.