If your sales has decreased 10% or more compared to the sales before COVID 19 and you are thinking about new business to recover your business performance, please consider Business Restructuring Grant Program (事業再構築補助金 Jigyo Saikochiku Hojokin). You can apply for it even if you have started new business. Also, if your new business is related to decarbonization, you can apply for this grant even if your sales have not decreased. I will explain the outline of Business Restructuring Program for corporations.
What is Business Restructuring Grant Program?
Business Restructuring Grant is awarded to corporations with 10% or more sales decrease or with 15% or more added value decrease compared to pre-COVID 19, to subsidize expenses (such as store renovation costs, machinery and equipment and advertising cost) for starting new services or changing businesses to survive along with the new normal and post-COVID 19.
However, if you apply for the “Green Category” of this grant program, which was newly established in the 6th round, you do not need to fulfill this requirement for sales decrease. The Green Category has been introduced for projects related to decarbonization. For example, you can apply for this category when you switch your business from manufacturing parts for gasoline-powered vehicles to manufacturing parts for electric vehicles.
How much would I receive?
The grant rates (percentage of expense amount that will be covered) are 1/2, 2/3 or 3/4 and the award ceiling is JPY 1 million to 150 million depending on the capital stock, number of employees and the types of the grant.
Who is eligible for Business Restructuring Grant Program?
Small and Medium Enterprises (SME) incorporated in Japan are eligible for Business Restructuring Grant Program. Criteria for determining whether or not a corporation falls under the category of SME varies depending on the industry. For a manufacturer, the threshold is the capital stock of JPY 300 million or the number of employees of 300. For a service provider, the threshold is the capital stock of JPY 50 million or the number of employees of 100.
Please note there are some exemptions such as a subsidiary of a large corporation being not eligible.
I have already started new business…can I still apply for it?
If you started new business on or after December 20, 2021, such new business still has a chance to be eligible for Business Restructuring Grant Program. Please note that you need to submit the application for “start-in-advance” and obtain the approval thereof.
What’s the Timeline of Business Restructuring Grant Program? What’s the Passing Rate?
Your application for the grant and business plan of your project will be reviewed by the grant operation office, and the awarded projects are announced approximately two months after the deadline of application. After that you have to complete the project within 16 months and submit the implementation report to the grant operation office. At that time evidence documents such as quotes, invoices and receipts relevant to the project are required to be submitted together. The grant operation office will check those evidence and will grant money only for those expenses that are approved to be necessary for the project. Therefore, even if the project that you applied has passed the review, it does not mean that you will receive the full amount written on the application. Furthermore, you have to submit the project status report every year for 5 years.
The passing rate of Business Restructuring Grant for the 4th round (the application of which was closed on Dec 21, 2022) was approximately 45%.
How Do I Finance the Project until the Grand is Paid?
As written above, you will receive the grant money only after the project has been completed. Therefore, you have to pay the expenses with your own money or loan. You can, however, get funded by a bank immediately after you have passed the review, which is called PO Finance. We can also advise on financing.
It is Required to Cooperate with a Qualified Support Agency for Business Innovation on Development of Business Plan is Required
You can apply by yourself for most of government grants such as Small Business Sales Expansion Grant Program (Shokibo Jigyosha Jizokuka Hojokin). When you apply for Business Restructuring Grant Program, however, you are required to develop your business plan for the project with and obtain a confirmation letter from a qualified support agency for business innovation (Nintei Keiei Kakushintou Shien Kikan). Eri Mizukami, CPA, President of Herald Advisory LLC, has such a qualification and can cooperate with you to develop a business plan and issue a confirmation letter.
We have uploaded the awarded projects by industry. Please check it out.
We assist you to apply for Business Restructuring Grant Program. If you want to apply for the 6th round, please contact us by June 10, 2022. Please feel free to contact us.
Author: Eri Mizukami, CPA