The government has expanded loan guarantees for vulnerable small and medium-size firms in the construction and related industries as part of efforts to counter the recent plunge in housing starts that threatens economic growth, the Ministry of Economy, Trade and Industry said Tuesday.

The temporary measure, which took effect Tuesday and will last until the end of March, adds 15 eligible industries, including construction, steel wholesale and housing materials manufacturers, to the 70 industries already covered. It doubles the guarantees a company can receive to ¥400 million in secured loans and ¥160 million in unsecured loans.

The move comes after the Bank of Japan last month cut its forecast for economic growth in fiscal 2007 due partly to a drop in construction activity. Private economists made a similar forecast this month.

"We have decided to expand loan guarantees to more industries, for those suffering from (slow housing starts) to support their finances," METI chief Akira Amari told a news conference.

The new measure is expected to serve as a safety net for small and medium-size companies and to avoid bankruptcies in the construction and related industries.

Bankruptcies in those sectors topped 300 in October for the first time since April 2005, according to Tokyo-based Teikoku Databank Ltd.

Housing starts in September plunged 44 percent from a year ago and investment in housing dropped 7.8 percent in the July-September quarter after the government tightened rules in June for building permits.

The stricter regulations were introduced in the wake of the 2005 scandal involving architect Hidetsugu Aneha's falsified earthquake-resistance and safety data.