The Japanese government is considering replenishing capital of businesses hit hard by the new coronavirus pandemic through subordinated loans and preferred shares, sources close to the matter said Thursday.

The plan will be included in a new stimulus package to ease the impact of the virus that will be financed by a second supplementary budget for fiscal 2020. Later Thursday, Prime Minister Shinzo Abe will instruct officials to draw up the fresh extra budget, according to the sources.

The state-owned Development Bank of Japan and the government-linked Japan Finance Corp. will offer the support measures, while the public-private fund Japan Investment Corp. will possibly join them, the sources said.

Subordinated loans have a lower repayment priority than other loans and can largely be treated as capital. Holders of preferred shares can receive higher dividend yields in place of voting rights.

Companies whose capital will be boosted by those steps could improve their financial standing and receive loans from banks more easily.

The government is also considering using the Regional Economy Vitalization Corp. of Japan, a public-private investment fund, to financially support troubled midsize firms in non-urban areas.

Among other measures expected to be included in the additional stimulus will be assistance for rent payments of cash-strapped business owners, the expansion of subsidies to allow companies to keep employees despite the suspension of their business, and financial aid for university students whose part-time jobs have been affected by the virus epidemic.

The government aims to enact the second extra budget before the current Diet session ends on June 17, the sources said.


Related coverage:

Japan to lift coronavirus emergency outside Tokyo, Osaka regions

Face masks embroidered with indigenous Ainu designs popular in Japan

Human coronavirus transmissible between domestic cats: study