TOKYO—It isn’t a great time to be running a hotel in Japan, since virtually all foreign tourists are barred from visiting the country. But the owner of a traditional Kobe hot-springs inn had no problem getting a loan for renovations.
It’s part of Japan’s latest freewheeling experiment in opening the monetary taps. Bank lending is rising at a record pace thanks to no-interest loans for small businesses that are backed by a public guarantee.
Using the government’s relief program for small and midsize companies hit by the coronavirus pandemic, banks have extended the equivalent of more than $250 billion in loans in less than six months, according to the Small and Medium Enterprise Agency.
“We can make aggressive investments thanks to the loans,” said Kazushige Kanai, owner of the Gosho Bessho inn, who borrowed an undisclosed amount from three banks. The money will go toward completing his plan to have private hot-spring tubs in each of his inn’s 10 rooms, a particular attraction now for guests who are worried about social distancing in the communal bath.
Relative to the size of its economy, Japan’s program is bigger than the main U.S. pandemic-aid program for small business, the Paycheck Protection Program, which delivered more than five million loans totaling $525 billion.