Banks and other private financiers in Japan are becoming more selective in their lending practices and charging higher interest rates on loans to small businesses that have a greater dependence on borrowing, according to a survey unveiled Monday by a government financier.

The nationwide survey by National Life Finance Corp. of 1,977 small and midsize companies found that firms whose spending depends 50 percent or more on borrowed money paid higher interest rates in 1999-2000 than in 1997-1998.

Companies with less dependence on loans, in contrast, were allowed to borrow funds at lower interest rates during the same period.

The survey compared the gap between the rates at which the companies actually borrowed and the short-term prime lending rates financiers were charging to creditworthy borrowers at the time.

For companies with a higher dependency on loans, the gap widened to 1.39 percentage points from 1.27, while less dependent ones saw a lessening of the gap to 1.09 from 1.23 points.

The survey also reveals that banks offer lower lending rates to firms capitalized between 50 million yen and 100 million yen than to those capitalized at below 30 million yen.

The government financial institution, which mainly serves small and midsize businesses, said the gap in interest rates charged to the two types of companies will widen.