Abe unveils zero-interest loan plan for virus-hit small businesses in Japan

Prime Minister Shinzo Abe has said the government will launch a plan to extend zero interest loans with no collateral to small and midsized companies reeling amid the COVID-19 outbreak.

The state-owned Japan Finance Corp. is among entities that will join the program aimed at helping small businesses gain access to financing to help them stay afloat, Abe said at a meeting of a government task force on the coronavirus response Saturday.

“We will make our utmost efforts to keep jobs and make sure companies can maintain their business,” Abe said during the meeting at his office.

The government will also financially support parents who have been forced to take time off to look after their children due to Abe’s abrupt decision to close all schools from last Monday to the start of the new school year in April.

Such parents will receive money to make up for any shortfall in their income due to their time off from work, Abe said. The government will also pay for programs to take care of children during the period of school closure.

Abe instructed Cabinet members at the task force meeting to step up work to compile a fresh emergency package on Tuesday. It will be aimed at mitigating the negative economic impact, strengthening measures to support parents who have school-age children and preventing the spread of the virus.

Abe has said he hopes to use ¥270 billion ($2.6 billion) in a state reserve fund for the current fiscal year through March “as much as possible.” The initial package announced in mid-February totaled ¥15.3 billion.

After coming under fire for his slow crisis response, Abe decided to shut schools and call for the cancellation and postponement of large-scale events to reduce group transmission risks. From Monday, Japan will restrict travel from China and South Korea.

Fears are growing that the Japanese economy will enter a recession after it shrank in the October to December quarter as the consumption tax hike dented private spending.

The total number of infections have topped 1,000 in Japan, including around 700 from the Diamond Princess cruise ship quarantined for two weeks in February in Yokohama. The death toll stands at 13.

Globally, the outbreak that began late last year in China’s central city of Wuhan has led to over 100,000 infections.

Abe is seeking to have special legislation, effective for two years, enacted by next Friday, enabling him to declare a state of emergency if needed.

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