Our Position in the Industry

As for the market size of commercial financing for small and medium-sized firms, we believe that this market is between 5 and 8 trillion yen. The outstanding financing of the National Life Finance Corporation that targets the same customer base as SFCG was 10.34 trillion yen as of the end of March 2003 and the balance of the Japan Finance Corporation for Small Business with the same base was about 7.56 trillion yen as of the end of March 2003. Therefore, we believe that funding demands of small and medium-sized firms continue to be strong.

Our loan operations fall under the regulations of the “Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits” and “Moneylending Control Law.” The former regulates the maximum interest rate as 29.2% and the latter requires the “advance registration system” for moneylenders along with issuing regulations concerning various work including the entering of written contracts, issuing of receipts and debt collection.

According to a survey in the White Paper on Moneylending, about 80% of companies involved in moneylending indicated increased severity in operations. Within these conditions, we have expanded our fund procurement to include overseas institutions from early on, and not restricted ourselves to Japanese financial institutions. This policy was entered upon to meet the demands of small and medium-sized firms, no matter what occurred. As a result, we have a dominant fund procurement ability in the industry with a capital adequacy rate of 62.2%. Furthermore, we have also successfully increased our outstanding loan balance for the first time in four years, thus securing a solid position within the industry. Most other firms in the industry are having great difficulty procuring funds and it is projected that there will be a greater oligopolization among the major players in the industry, which have the financial base to withstand issues concerning fund procurement ability and decreases in interest. As the key player in this severe commercial financing industry, with its increasing oligopolization, we will continue to maintain our leading position.