The government will soon have to tread a fine line between heeding small firms' calls to expand its loan guarantee service and nursing the default insurance system back to financial health.
Although the government has decided to extend its guarantee to a wider range of financial institutions, the step can only worsen the insurance system's quickly deteriorating finances, sources say.
Prodded by the Ministry of Economy, Trade and Industry, a panel of Cabinet ministers in September started looking at ways to expand the loan-guarantee service next year.
The ministers have agreed to extend public loan guarantees to loans taken out from non-bank financial institutions. Currently, they are only available through banks, credit unions and associations.
The widening of the service has been keenly awaited by small businesses.
