It takes time and money to establish an overseas corporation and develop business overseas. Overseas expansion increases opportunities, but let’s also think about the costs that will be incurred. This section introduces the guarantee association system that companies can utilize.

Credit Guarantee Corporations

By expanding overseas, companies can capture significant opportunities. However, overseas expansion may not proceed smoothly. According to the “”Report on Survey of Overseas Business Activities of Small and Medium Enterprises”” conducted by the Organization for Small & Medium Enterprises and Regional Innovation, Japan, a survey of companies that have expanded overseas, many companies cite financing as a necessary preparation for establishing overseas bases. There are also opinions that it is difficult to raise funds as the reason for withdrawing from overseas or considering withdrawal.

Credit guarantee corporations are one of the institutions that support SMEs with financing needs. Credit guarantee corporations are public institutions established to facilitate financing for small and medium-sized enterprises and small business operators. It helps businesses to provide credit guarantees when raising business funds from financial institutions. The role of credit guarantee corporations is not to lend funds directly, but to support financing through credit guarantees.

In order to use the credit guarantee system, businesses apply for a credit guarantee with a credit guarantee association. If the credit guarantee corporation accepts the guarantee, the business owner receives a loan from a financial institution. If the loan cannot be repaid, the credit guarantee association will pay the loan by subrogation, and the employer will repay the loan to the credit guarantee association.

There are credit guarantee corporations in 47 prefectures and 4 cities, and they have close ties to the local community and provide generous support to companies. For example, it is possible to expand the line of credit by combining professional loans and guaranteed loans at financial institutions. In addition, collateral or guarantors other than corporate representatives are not required in principle to use credit guarantee corporations.

Reference: Organization for Small & Medium Enterprises and Regional Innovation, JAPAN Fiscal 28 SME Overseas Business Activity Survey Report

Credit Guarantee Corporations’ Overseas Investment Guarantee

Credit Guarantee Corporations' Overseas Investment Guarantee
When a small or medium-sized enterprise intends to obtain funds from a financial institution for investment in or lending to an overseas subsidiary, it can obtain overseas investment-related guarantees from the Credit Guarantee Corporation.

The Overseas Investment Guarantee Program applies to domestic SMEs that make direct investments overseas. In addition, funds invested in overseas corporations with an equity ratio of 10% or more, underwriting expenses for bonds issued by the overseas corporations, or loans provided by the overseas corporations are subject to the law.

In addition, loans to overseas corporations with a permanent relationship, such as the supply of raw materials, and expenses for the establishment and expansion of overseas branches and factories are also covered. It can also be used for employee education and research expenses required for the business.

In principle, the warranty period is within 10 years, and the amount of the warranty is within 200 million yen in addition to the general warranty. Applications are made at the local credit guarantee associations. Also, when you apply, you submit a plan for each target fund. For example, in the case of funds for the acquisition of securities, a plan for the acquisition of securities, and in the case of funds for the establishment and expansion of branch offices, etc., a plan for the establishment and expansion is submitted. Overseas Investment Guarantee can be used from the preparatory stage for overseas expansion.

Special Letter of Credit Guarantee Program

The Overseas Investment Guarantee Program is not the only program that credit guarantee corporations provide for SMEs expanding overseas. The specified letter of credit-related guarantee system can also be used when foreign subsidiaries receive loans from financial institutions.

When raising funds from local financial institutions, Japanese companies ask domestic financial institutions to issue standby letters of credit. A standby letter of credit is a system in which a domestic financial institution issues a letter of credit to support local borrowing when an overseas subsidiary with a head office in Japan borrows. Credit guarantee corporations provide guarantees when Japanese companies conclude L/C issuance contracts with domestic financial institutions.

In other words, it is easier to raise funds from local financial institutions with support from credit guarantee corporations. By borrowing from local financial institutions, you can avoid exchange risk by borrowing in local currency. We can also expect to strengthen relations with local financial institutions.

In the case of financing through overseas expansion, there may be cases in which local financial institutions borrow funds without any experience. Even in such cases, it may be possible to continuously raise working capital through the use of standby letters of credit from domestic financial institutions and the specified letter of credit guarantee system provided by credit guarantee corporations.

Overseas Investment Guarantee Program and Specified Letter of Credit Guarantee Program are accepted as needed. Please consult your local credit guarantee before using it.


Cash flow issues are an integral part of our overseas operations. Overseas operations require a large amount of research expenses, personnel expenses, and the establishment of corporations. If you don’t have a cash surplus, you may not be able to survive until you turn a profit.

The Credit Guarantee Corporation has also set up a support desk to provide consultation on financing for overseas expansion. Credit guarantee corporations provide integrated financial and management support to help SMEs expand overseas and introduce support organizations. If you can’t gather information about overseas expansion, or if you want information about an organization that supports overseas expansion, consult with a credit guarantee association.