（Original Video in Japanese was published on the FINOLAB CHANNEL on Feb. 24, 2026 by Makoto Shibata）

On May 25, 2026, Japan will reach a historic milestone in its financial evolution with the enforcement of the “Act on Promotion of Business-Based Financing.” The centerpiece of this legislation is the introduction of “Enterprise Value Collateral Rights”—a new lending framework designed to move away from the traditional reliance on real estate collateral and personal guarantees from business owners.

1. What is “Enterprise Value Collateral”?

Historically, Japanese bank loans have required “tangible assets” such as land or buildings as security. However, the core strengths of modern startups and service industries lie in “intangible assets”—brands, proprietary know-how, and customer bases.

• Scope of Collateral: This right covers a company’s “total assets.” This includes future assets, intellectual property, business models, and projected cash flows.
• Evaluation Perspective: Instead of looking solely at past financial statements or real estate appraisals, lenders will evaluate a company’s future potential and growth capacity.
• The Mechanism: The right is established and registered via a trust agreement. In the event of default, the principle is to pursue a “business transfer” (selling the business as a whole) rather than liquidating individual assets, ensuring business continuity.

2. Why is this Reform Necessary Now?

Japan’s traditional financial system has faced long-standing criticism for two main reasons:

1. Limited Growth Support: Even high-growth companies were often unable to secure sufficient loans because they lacked physical collateral.
2. Rigid Supply of Capital: It was difficult to provide capital flexibly for critical stages such as business succession or corporate restructuring.

Under the new system, if a business can prove its future viability, it is expected that the flow of “risk money” will improve across all phases: from founding and growth to turnaround.

3. Benefits for Startups: The Coexistence of Debt and Equity

For startups—particularly those between Series A and Series B rounds—this system serves as a powerful new tool.

• Preventing Equity Dilution: Previously, founders were forced to rely almost entirely on Venture Capital (equity), often leading to excessive dilution of their ownership. Now, “Bank Loans (Debt)” become a viable alternative.
• Lending Possible Despite Deficits: For SaaS companies that are in the red due to heavy upfront investment, banks can now provide growth capital if they can verify healthy KPIs, such as low Churn Rates or high LTV (Lifetime Value).
• Clearer Role Division: A synergy will emerge where VCs provide “aggressive risk money” for high-stakes bets, while banks provide “stable growth capital” based on business value.

4. The Challenge of “Advanced Discernment”

For this system to succeed, several hurdles must be overcome:

• Establishing Evaluation Models: Determining who measures business value and how is critical. There is an urgent need for specialists and models capable of judging market growth and human capital.
• Monitoring Burden: Startups will be required to maintain transparent KPI management and actively disclose both financial and non-financial information.
• Regional Bank Capabilities: A major focus will be whether regional banks, which may have limited specialized personnel, can effectively step into this advanced form of credit judgment.

5. Case Studies: Pioneers of Venture Debt in Japan

While the formal introduction of the “Enterprise Value Collateral” system is set for 2026, several forward-thinking financial institutions and startups are already paving the way. By utilizing creative debt structures, these players are providing vital capital to startups that have traditionally been overlooked.

• Aozora Bank: A true pioneer in the space, Aozora has a long-standing history of actively promoting debt financing for venture companies, leveraging internal expertise to evaluate high-growth potential where others saw only risk.
• UPSIDER & Mizuho Bank: One of the most notable recent developments is the “UPSIDER Blue Dream Fund.” This collaboration combines the speed of a fintech startup with the capital strength of a megabank, creating a fund specialized specifically in venture debt.
• Flex Capital (Fivot): As a representative of fintech-led lending, Flex Capital provides data-driven venture debt. They offer a flexible alternative to equity financing, allowing founders to fuel growth without immediate dilution.
• Siiibo Securities: In a clever use of existing financial instruments, Siiibo enables startups to raise what is essentially venture debt by issuing corporate bonds via private placement. This demonstrates how existing systems can be innovated to create new pathways for capital.

Summary: A System that Tests the “Power of Belief” in the Japanese Economy

The introduction of Enterprise Value Collateral is more than just a new loan product. It is a system that tests how much Japan’s indirect financial sector can truly “believe in” and support the future potential of its companies.

If banks can accurately evaluate the growth margins of startups and deepen their relationships, the Japanese economy stands a real chance of returning to a path of powerful, sustained growth.