While the economy still shows mixed signs of recovery, small companies are engaged in a struggle for survival. Japan's economic fortunes hinge on the successes of small companies, including venture businesses, and their activities need to be watched closely.

In a recent poll of small businesses conducted by the Ministry of International Trade and Industry, however, a quarter of the respondents complained of the reluctance of banks to offer loans. Small companies are having difficulty raising capital.

In this financial environment, the Tokyo Metropolitan Government has launched a scheme to help cash-strapped small firms raise capital through a new type of security, known as collateralized loan obligations (CLOs), beginning this spring. This has opened the way for small companies to raise capital through bonds, as well as through bank loans. Tokyo Gov. Shintaro Ishihara, keeping an election pledge, created a local market for trading bonds issued by such companies. Osaka Prefecture is also considering a different method of helping small companies raise capital. Moves by local governments to take a leading role in financial policymaking are much appreciated as a way to help stimulate local economies.