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Finance

Japan's big banks begin low-rate loans to virus-hit businesses

New funds set up with no-interest money from central bank

Sumitomo Mitsui Banking Corp.launched a fund to support companies hit hard by the coronavirus pandemic.

TOKYO -- The core units of leading Japanese banks Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group launched funds Wednesday to provide cash to companies suffering from supply-chain breakdowns and other business disruptions due to the coronavirus crisis.

The funds are financed with no-interest loans obtained through the Bank of Japan's liquidity-injection market operation the previous day. New loans for businesses are extended for up to one year at lower-than-usual rates.

Sumitomo Mitsui Banking Corp. set up a 200 billion yen ($1.8 billion) fund for big corporations that need to rebuild their supply chains due to reduced output at their overseas factories or breakdowns in logistics networks. The bank has also arranged a 100 billion yen fund for small and midsize businesses that are having earnings problems, and will consider adding more cash if necessary.

MUFG Bank will use a new fund of hundreds of billions of yen to help existing borrowers that are suffering from declines in sales or experiencing problems procuring parts due to the pandemic.

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