Significant increase in subrogation payments “Zero Zero Loan” repayments and high prices Ishikawa/Toyama Credit Guarantee Association Possibility of further increase in the future: Hokuriku Chunichi Shimbun Web

The amount of “subrogation payments,” in which credit guarantee associations in Ishikawa and Toyama prefectures take over the debt repayments of businesses in fiscal 2023, has increased significantly from the previous year. It appears that small and medium-sized businesses that were able to sustain their operations through virtually interest-free, unsecured loans (zero-zero loans) to combat the novel coronavirus have found themselves unable to survive due to full-scale repayments, rising prices, and labor shortages. However, there is a strong view that the number of businesses that are unable to make repayments is relatively limited due to the refinancing system, and there is a fear that the amount of subrogated payments will increase further in the future. (Koichi Ito)

The amount paid by Ishikawa Prefecture Credit Guarantee Association was 3,348 million yen, an increase of 43.3% from the previous year, and the number of companies was 137, an increase of 34.3%. The service industry accounted for the largest number of companies, with 34 companies. This was followed by the food and beverage industry (32 companies) and the construction industry (29 companies).

In Ishikawa Prefecture, when zero-zero loans began in 2020, the percentage of business operators who chose a three-year grace period was 51%, higher than in other prefectures. As a result, repayments began all at once in the summer of 2023, leading to financial difficulties, which is thought to be one reason for the increase in subrogated payments. A representative said, “At a time when the company was suffering from high prices and labor shortages, repayments for the Zero Zero loan came at the same time.”

The amount paid by Toyama Prefecture Credit Guarantee Association was 3,906 million yen, an increase of 71.7%, and the number of companies was 140, an increase of 66.7%. Construction, manufacturing, and retail industries paid the most. Small and medium-sized businesses, which had been struggling even before the coronavirus outbreak, survived through zero-zero loans and other means, but it appears that “corona-related support measures have ended, and there is no clear path forward.” (according to the person in charge).

However, there is a possibility that the amount of subrogated payments will actually increase in the future. This is because the Credit Guarantee Associations in both Ishikawa and Toyama prefectures are recommending that businesses that are having difficulty repaying zero-zero loans refinance into other system loans, taking into account the current difficult economic situation, including high prices. Due to an increase in the use of institutional loans, Ishikawa’s guarantee amount in fiscal 2013 increased by 2.2 times from the previous year to 95,198 million yen, and Toyama’s also increased by 3.7% to 86,176 million yen.

The consensus among credit bureaus is that bankruptcies are lower in the Hokuriku region compared to the rest of the country due to refinancing.

However, refinancing is a way to postpone repayments, so if the business cannot recover through management changes or restructuring before the next repayment, the guarantee association will eventually have to make the repayments and taxes will be used to cover the gap. It turns out. A representative from the Ishikawa Prefecture Credit Guarantee Association emphasizes, “Management support while you are buying time through refinancing will be extremely important.”