The number of companies that went bankrupt despite taking advantage of a special public loan guarantee system for small and midsize firms introduced in October 1998 reached 2,582 at the end of February, according to data made available Thursday by Teikoku Databank.
Of the 2,582, 96.5 percent were small firms capitalized at less than 50 million yen; construction companies accounted for 38.2 percent of the total.
The data covered bankruptcies with debts of 10 million yen or more.
Smaller companies have used funds obtained under the loan guarantee system to meet urgent funding requirements rather than to improve their financial standing, an official of the private credit research agency said.
Monthly failures of firms using the system amounted to over 200 in February for the seventh consecutive month.
The system, under which smaller firms take out bank loans using repayment guarantees provided by local credit guarantee associations, was introduced in October 1998 in order to increase the availability of funds to cash-strapped businesses.
The number of business failures recorded by firms making use of the system accounted for 11.4 percent of the total bankruptcies recorded during the period from October 1998 through February.
Liabilities of those failures totaled 945.7 billion yen, or 5.3 percent of overall liabilities.
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