Credit Guarantee Corporations (CGCs) are public institutions that support small and medium enterprises (SMEs) by serving as guarantors to make it easier for them to borrow funds, which are necessary for their business operations, from financial institutions. SMEs play an important role in Japan's economy. The credit guarantee system improves the credit worthiness of SMEs, which lack physical collateral and have weak credit standings. It helps direct funds to them from private financial institutions and provides them with smoother access to financing. A key characteristic of the credit guarantee system in Japan is that it is actually a combination of the credit guarantee system operated by CGCs, which were mainly established through financial assistance from local government,.
