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Only 7.7% feel law improves business environment for applying for repayment rescheduling -- Some 40% to lower credit line if customer applies for rescheduling based on judgment applying for rescheduling means problem in cash flow -- Introduction At the extraordinary Diet session on November 30, 2009, the Japanese government legislated Comprehensive Measures to Facilitate Financing for Small and Medium-Sized Enterprises (the Loan Repayment Moratorium Law), which gives debt repayment moratorium to mid-size to small companies; this law came into force on December 4. Teikoku Data Bank conducted a survey on corporate attitudes toward debt repayment rescheduling and credit management after enforcement of the law. Research Period: December 17, 2009 to January 5, 2010 Research Subjects: 21,632 companies in Japan Valid Responses: 10,359 companies (response rate: 47.9%) Results of the Research Only 7.7% feel moratorium law made it easier to apply for repayment rescheduling Asked whether the enforcement of the Law on Comprehensive Measures to Facilitate Financing for Small and Medium-Sized Enterprises (loan repayment moratorium law) caused changes in the business environment that would affect the general reputation of asking banks for debt repayment rescheduling or debt moratorium, 4,523 companies said they would not need repayment rescheduling, and 7.7% of the remaining 5,836 companies said there were positive changes (companies that said there were "Very positive changes" or "Somewhat positive changes"). Meanwhile, an additional 7.7% of the 5,836 companies said there were negative changes (companies that said there were "Very negative changes" or "Somewhat negative changes"). The result also shows that 6.5% of the 5,836 companies are considering applying for repayment rescheduling. Over 20% expect allowing rescheduling to have a positive impact on B2B transactions Asked whether they expect the law allowing for rescheduling of repayment to have a positive impact on transactions between companies, 35.1% of 10,359 companies said they did not expect a positive impact. Meanwhile, more than 20% said they expect the proliferation of rescheduling to have a positive impact on corporate transactions, consisting of 0.9% expecting a very positive impact and 19.3% expecting somewhat of a positive impact. This result implies that the law is having quite an impact on society as a whole. 40.3% to lower credit line if customer company applies for rescheduling Asked if there would be any change in attitude in credit line management if a customer asks banks for repayment rescheduling after the enforcement of the law, 40.3% said they would “tighten credit conditions (lower the credit line)”, accounting for the largest percentage. Over 80% regard applying for rescheduling as a sign of cash flow problems 82.5% of the 4,172 companies that said they would lower the credit line if a customer applies for rescheduling said they would do so because they regard applying for rescheduling as a sign of cash flow problems (multiple answers allowed, the same shall apply hereinafter). Meanwhile, 67.2% of the companies that said they would relax credit conditions said they expect the business of the company to recover during the moratorium period. 74.5% expect demand will not fully recover before 2011 Since the repayment moratorium law is temporary legislation through March 2011, demand needs to recover as soon as possible in order for companies to revitalize their business and conduct transactions smoothly. Asked when they expect demand in their respective regions or industries to fully recover, 29.7% said they expect it to be 2011, accounting for the largest percentage. 74.5%, or three out of every four companies, think demand will not fully recover before 2011. Survey on Corporate Attitudes after Enforcement of the Repayment Moratorium Law 
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