Article 1.　The purpose of this Law is to establish a system whereby the Government furnishes credit insurance to the loans made by financial institutions to smaller entrepreneurs in order to facilitate the accommodation of business fund to smaller entrepreneurs and thus to encourage smaller enterprises.

Article 2.　The term "financial institutions" as used in this Law shall mean banks (excluding the Bank of Japan), mutual loan companies, the Central Bank for Agriculture and Forestry, the Central Bank for Commercial and Industrial Cooperatives, and the credit cooperatives.

2　The term "smaller entrepreneurs" as used in this Law shall mean such companies with a capital (the total of shares, the total of capital investment, or the aggregate of the total of shares and the total of capital investment) of not more than 5 million yen, companies or individuals with not more than 200 personnel regularly employed, smaller enterprises, etc. cooperatives, agricultural cooperatives, federations of agricultural cooperatives, or fishery cooperatives which are carrying on business belonging to the kinds of industries designated by Cabinet Order.

Article 3.　The Government may, every half term of the fiscal year, conclude a contract with a financial institution which provides that insurance relations are to be established between the Government and such financial institution, upon notification from such financial institution to the Government that it has made a loan to a smaller entrepreneur, in regard to such loan until its amount reaches a fixed amount.

2　In the insurance relations under the preceding paragraph, the amount of loan shall be the insurance value, incomplete collection of the loan on account of non-performance of obligation at the date due shall constitute an insurance accident and 75 per cent of the insurance value shall be the amount insured.

3　The Government shall conclude the contract under paragraph 1 only within the limited amount decided by the Diet for each fiscal year as the sum total of loans made through financial institutions in regard to which the insurance relations are established under the same paragraph.

Article 4.　The loan or loans on which the insurance relations under paragraph 1 of the preceding Article may be established shall be only those which are necessary for the encouragement of business carried on by smaller entrepreneurs, and the term of which is not less than 6 months.

2　The amount of loan or loans under the preceding paragraph shall not exceed 3 million yen in total for each smaller entrepreneurs (10 million yen in the case of the smaller enterprises, etc. cooperatives).

Article 5.　The amount of insurance premium shall be the amount obtained by multiplying the amount insured by the ratio set by Cabinet Order within 3 per cent per annum.

Article 6.　The amount to be paid by the Government in accordance with the insurance relations under Article 3 paragraph 1 shall be 75 per cent of the amount which remains after deducting from the insurance value the amount collected up to the time the financial institution requests the payment of insurance money.

Article 7.　The financial institution may make request for the payment of insurance money only after the lapse of 6 months from the date insurance accident has occurred.

2　The financial institution may not make request under the preceding paragraph after the lapse of 18 months from the date insurance accident has occurred.

Article 8.　In case the Government has paid the insurance money as a result of incomplete collection of loan or loans made by the financial institution, the Government is subrogated to the rights of the financial institution at the rate of 75 per cent of the outstanding claim on loan at the date that the request has been made for the payment of the insurance money and shall exercise all rights possessed by the financial institution as the effects and securities of rights on such loan or loans.

Article 9.　The financial institution shall strive to collect the loan for which insurance relations under Article 3 paragraph 1 have been established.

Article 10.　The Government may, in case any financial institution has violated this Law (including orders issued thereunder) or acted in contravention of the terms of the contract under Article 3 paragraph 1, suspend the whole of a part of payment based on the insurance relations under the same paragraph, cause the financial institution to reimburse the whole or a part of the amount paid, or cancel the contract under the same paragraph for the future.

Article 11.　The Government may, as provided for by Cabinet Order, delegate the business of receiving of the notification provided for in Article 3 paragraph 1, paying of insurance money, and a part of other business based on the provisions of this Law to the Central Bank for Commercial and Industrial Associations.

2　The Government may delegate its business with respect to the exercise of rights on loans made by the financial institution provided for in Article 8 to the financial institution concerned.

3　In the case of the preceding two paragraphs, the officers or employees of the financial institution engaging in the delegated business pursuant to the preceding two paragraphs shall be deemed to be personnel engaging in public service pursuant to laws and orders, in regard to the application of the Penal Code (Law No.45 of 1907) and other penal provisions.

Article 12.　The Minister of International Trade and Industry shall take charge of the business of the Government prescribed by this Law.

2　The Minister of International Trade and Industry, in concluding the contract under Article 3 paragraph 1, shall consult in advance with the Minister of Finance.