Financial Services Agency Plans Regulatory Relaxation for Startup Lending, Amendment to Nonbank Bond Law in 2027

The Financial Services Agency plans to amend the Nonbank Bond Law by 2027 to relax regulatory restrictions on specialist lending companies providing financing to startups. The current law requires a minimum capital of 1 billion yen for bond issuance, but the FSA is considering reducing or eliminating this requirement. Simultaneously, personnel requirements, such as the mandatory placement of experienced credit analysts, will be relaxed. The regulatory relaxation is driven by the fact that startup lending in 2025 declined approximately 10% year-over-year to about 220 billion yen, lagging significantly behind international levels such as the United States. There is an urgent need to expand funding supply to support cutting-edge technologies like AI and pharmaceuticals and accelerate startup growth through government and private sector efforts. The FSA will seek approval on the reform direction at the Financial Deliberation Council in August and aim to submit the amendment bill to the ordinary Diet session in 2027. This regulatory relaxation represents a potential turning point in the startup ecosystem. By establishing a new financing channel alongside venture capital investments, startups can access flexible funding suited to their growth stages. The measure is positioned as part of institutional reforms to achieve the Japanese government's stated goal of the "Five-Year Startup Cultivation Plan."