The Japanese government will allow state-backed lenders alone to provide capital support to COVID-19-hit companies, Jiji Press learned on Thursday.

Subject to the change will be subordinated loans, which are close to capital, to midsize and large companies from the Development Bank of Japan and Shoko Chukin Bank.

Currently, these state lenders can provide such financial aid only in tandem with commercial banks, a rule designed to avoid pressuring the private sector.

Specifically, the same or more amount of loans as those from the state lenders have to be provided by commercial banks.Behind the change is commercial banks’ hesitation to extend capital support to restaurants and hotels thathave been hit hard by the pandemic.

The government plans to fully end its COVID-19 state of emergency on Sunday, but restaurants and bars, which provide jobs to many people, will continue to be requested to shorten business hours.

The subordinated loan program, which was set up under a supplementary budget, has no upper limit on the amount of money supplied.

Greater support from state lenders may create so-called zombie companies that survive on debt

.JIJI Press