According to the results on the use of the “Guidelines for Personal Guarantees Provided by Business Owners” published by Japan’s Financial Services Agency (FSA) on June 26, 2026, loans that did not rely on a personal guarantee from the business owner accounted for 55.7% of all new loans extended by private financial institutions (529 institutions) in FY2025. That is 4.6 times the 12.2% recorded in FY2015, ten years earlier. Add to this the enterprise value security interest (企業価値担保権), which took effect on May 25, 2026, and financing for the lodging industry has entered a phase where it is measured not only by “the collateral value of the real estate” but also by “the earning power of the business.” In this article, we first confirm the latest figures for each scheme from primary sources. We then split the 16,458 ryokan and hotels in Japan tracked by MetroEngines Research into room-count bands, estimate annual room revenue and an indicative borrowing capacity for each band from its estimated settled ADR and occupancy rate, and lay out which scheme is realistic for which size band.

Guarantee-Free Loans Reach 55.7% of New Lending — Up 4.6x from 12.2% in a Decade

Let us start with where the schemes now stand. In the FY2025 results for private financial institutions compiled by the FSA (529 institutions in total: 9 major banks, 24 other banks, 97 regional banks, 255 shinkin banks and 144 credit cooperatives), of 2,192,188 new loans, 1,213,263 were extended without a guarantee and 7,997 used alternative methods such as conditional guarantee contracts (with conditions precedent or subsequent) and ABL — a combined 1,221,260 loans that “did not rely on a business owner’s guarantee.” That is 55.7%, up 2.8 points from 52.9% in FY2024. The first half (April–September 2025) came in at 55.8% and the second half (October 2025–March 2026) at 55.6%; the fact that the ratio held above half throughout the year shows that this is not a one-off.

Looking back, the ratio went from 12.2% in FY2015 to 21.6% in FY2019 and 33.9% in FY2022, then jumped 13.7 points to 47.6% in FY2023. Behind this was the “Business Owner Guarantee Reform Program” drawn up in December 2022 by the Ministry of Economy, Trade and Industry, the FSA and the Ministry of Finance, and the resulting April 2023 revision of the supervisory guidelines, which require financial institutions that ask for a guarantee to explain to the borrower “which aspects are insufficient and therefore require a guarantee,” and to record that explanation. In fact, the combined share of guarantee-free loans and “guaranteed loans for which an appropriate explanation was given and recorded” reached 99.9% in FY2025 — explaining the reason has become standard practice even when a guarantee is taken.

Source: Compiled by the HotelBank Editorial Team from FSA, “Use of the ‘Guidelines for Personal Guarantees Provided by Business Owners’ at Private Financial Institutions” (published June 26, 2026)

By lending channel, the levels differ considerably. According to the FY2025 results for government-affiliated financial institutions published by the Small and Medium Enterprise Agency (SMEA), Shoko Chukin Bank stood at 69.3% (12,414 of 17,908 new loans) and Japan Finance Corporation (JFC) at 54.3% (70,323 of 129,556; long-term loans, excluding personal loans of the Micro Business and Individual Unit). In contrast, for loans guaranteed by credit guarantee corporations, only 216,034 of 584,576 guarantee approvals — 37.0% — were made without requiring a guarantor. That 37.0%, however, includes 23,762 cases under the “business-selected no-owner-guarantee scheme” launched in March 2024 and 2,121 under the startup creation promotion guarantee, indicating that the option of paying a higher guarantee fee to drop the guarantor is starting to be used in practice.

Source: Compiled by the HotelBank Editorial Team from FSA (published June 26, 2026) and SMEA, “Use of the ‘Guidelines for Personal Guarantees Provided by Business Owners’ at Government-Affiliated Financial Institutions / Credit Guarantee Corporations (FY2025)”

For owners considering succession, the breakdown of “how CEO changes were handled” is hard to overlook. Of the 40,170 CEO changes recorded by private financial institutions in FY2025, 16.7% (6,710 cases) released the former owner’s guarantee and did not require one from the new owner, and 39.7% (15,932 cases) kept the former owner’s guarantee but did not require one from the new owner — so in 56.4% of cases the successor did not take on a guarantee. The same combined figure was 28.5% in FY2017, meaning it has nearly doubled in eight years. For loans guaranteed by credit guarantee corporations as well, the new owner provided no guarantee in 65.1% (27,215) of 41,816 CEO changes. Conditions under which “the successor does not have to put up personal assets” are becoming the majority, at least by case count. Given the structural reasons why business succession is stalling among ryokan (see Ryokan Succession Crisis: 89 Bankruptcies & 30% Without Heirs for details), a lower guarantee barrier can be seen as a change that widens the door for those taking over.

Paying a Higher Guarantee Fee to Drop the Guarantor — Requirements and Rates of the Business-Selected Scheme

The cross-cutting mechanism for removing the business owner’s guarantee from credit-guaranteed loans is the “business-selected no-owner-guarantee scheme” (事業者選択型経営者保証非提供制度), which began on March 15, 2024. According to the SMEA’s outline, a borrower must meet all four of the following requirements. First, it must have submitted financial statements and similar documents at the request of the lending institution for the past two years (or since establishment, if less than two years). Second, in the latest fiscal year there must be no loans to the representative, and executive compensation, bonuses and dividends must not exceed amounts considered reasonable by social norms. Third, in the latest fiscal year the company must not be in excess of liabilities over assets, or its ordinary income before depreciation must not have been negative for two consecutive fiscal years. Fourth, it must submit a written pledge to continue meeting the first and second requirements.

The guarantee fee is the credit guarantee corporation’s standard rate plus 0.25% if the borrower meets both parts of the third requirement (“not in excess of liabilities” and “ordinary income before depreciation not negative for two consecutive years”), or plus 0.45% if it meets only one, or has not yet closed two fiscal years since establishment. Eligible guarantees include those under unsecured insurance (limit ¥80 million), and no guarantor is needed. In addition, as a temporary measure through the end of March 2027, a special guarantee program in which the government subsidizes part of the surcharge has been set up alongside it, with the subsidy tapering from 0.15% for FY2024 applications to 0.10% for FY2025 applications and 0.05% for applications from April 1, 2026 to March 31, 2027. In other words, applying during FY2026 lets a borrower drop the guarantor for an effective surcharge of 0.20% (when both requirements are met); on borrowings of ¥80 million, the additional annual cost would be only about ¥160,000.

Translated into lodging-industry practice, the requirements boil down to three points: “submitting financial statements to the bank properly every period,” “keeping the flow of funds between the owner personally and the company in order,” and “not having recently fallen into excess of liabilities, or staying profitable before depreciation.” Lodging is a capital-intensive business with heavy depreciation, and it is not unusual for a property to post a net loss yet be profitable at the level of ordinary income before depreciation. The lodging edition of the FSA’s “Key Points for Industry-Specific Support,” published in March 2025, also notes that “in practice, achieving or maintaining a surplus in operating income before depreciation (≈ ordinary balance) often serves as a benchmark for support,” so the design of the requirements fits the realities of this business.

The Enterprise Value Security Interest Took Effect on May 25, 2026 — Two Yardsticks: Collateral Value and Income Capitalization

The other scheme is the enterprise value security interest under the Act on the Promotion of Business-Based Lending. The FSA’s official page and flyer state “Starting May 25, 2026,” positioning it as “a scheme to support lending that focuses on the future prospects of a business, without excessive reliance on real estate collateral or business owner guarantees.” The borrower pledges its entire property (the business as a whole, including its future prospects) as a single security, with a trust company or similar entity acting as the security holder and the interest registered in the commercial register. It can be created only by stock companies and membership companies; sole proprietors and non-company legal entities are excluded. Besides startups without tangible assets, the FSA lists four types of envisaged use: “companies considering business succession — raising funds based on an assessment of prospects after succession, while also reducing the business owner guarantee burden,” “companies seeking to take risks to expand or revitalize their business,” and “M&A and project finance.”

For the lodging industry, the essential change is that lending will now have two yardsticks. In conventional real estate-secured lending, collateral value is measured by “how much it would sell for if disposed of.” For ryokan in regional hot spring areas and suburbs, buildings are aging and land values (rosenka) are low, so collateral valuations have tended to be small no matter how strong the customer base. The FSA’s outline explains this with the example of “a traditional restaurant (ryotei) that has operated locally for many years — previously it was difficult to obtain a loan for a major renovation because of the low collateral value of its real estate, but a financial institution that valued its long-standing customer base, brand strength and business plan extended the loan.” Under the income capitalization yardstick, what is evaluated is “how much cash flow this business will generate in the future,” so operating metrics such as occupancy, ADR, repeat rate and booking channel mix become the very basis of collateral value.

That said, the FSA’s FAQ also tempers expectations. Loans secured by an enterprise value security interest are not treated as “general collateral” for provisioning purposes, and because enterprise value “depends heavily on subjective elements such as future outlook, and is difficult to rely on if the business ceases,” whether to lend and how much “is determined based on an assessment of the amount of funds required to realize the business’s future prospects (business plan, etc.),” and “enterprise value is not directly linked to the loan amount — in many cases it is expected not to be calculated at the time of lending.” In other words, it is more accurate to understand the enterprise value security interest not as “a mechanism to borrow beyond the appraised value of the building,” but as “a mechanism that lets a property able to show its use of funds and source of repayment in a business plan seek financing without being constrained by real estate valuation.” Financial institutions are not required to set up new departments or outsource; the expected practice is for branch loan officers to conclude a trust agreement in addition to the loan agreement and assess the business’s viability.

60% of Japan’s 16,458 Properties Have 49 Rooms or Fewer — 90% of Ryokan Are Concentrated in the Small Bands

So in which size bands are the properties these schemes can actually reach? Splitting the 16,458 properties tracked by MetroEngines Research that are confirmed to be operating and classified as ryokan, business hotel, resort hotel or city hotel by room count gives 5,873 properties (35.7%) with up to 19 rooms, 4,156 (25.3%) with 20–49 rooms, 2,755 (16.7%) with 50–99 rooms and 3,674 (22.3%) with 100 rooms or more. By number of properties, those with 49 rooms or fewer total 10,029, or 60.9% of the whole; by rooms, however, they account for only 196,197 rooms, or 17.9% of the total 1,094,617. The “count” of supply skews small, while its “volume” skews large.

The skew by property type is even greater. Of 7,741 ryokan, 4,921 have up to 19 rooms and 2,054 have 20–49 rooms, so 90.1% have 49 rooms or fewer. Only 185 ryokan have 100 rooms or more. Business hotels, by contrast, are most numerous in the 100+ room band, with 2,604 of 6,389 (40.8%), and only 628 have 19 rooms or fewer. Whether guarantee-free loans and the enterprise value security interest can work as “vehicles for succession” depends on whether the conditions for them come together in this small-ryokan segment.

Source: Compiled by the HotelBank Editorial Team from MetroEngines Research data (N=16,458 properties, as of October 2026, operating properties only)

Annual Room Revenue and Indicative Borrowing by Size Band — Working Back from DSCR 1.3

If the income capitalization yardstick is going to be used, properties will want to know, by the same yardstick, how much borrowing their own business can support. Here, for each size band and property type, we estimated annual room revenue from the median estimated settled ADR, the Japan Tourism Agency’s 2025 occupancy rate and the band’s average room count, then divided the source of repayment (equivalent to operating income before depreciation) by a DSCR (the ratio of repayment capacity to annual principal and interest) of 1.3 to derive an indicative borrowing capacity. For ADR, we averaged the monthly estimated settled ADR from September 2025 to August 2026 for up to 120 randomly sampled properties in each band and used the median and interquartile range. The yardstick is the same as in Hotel Debt Capacity: LTV 57–63% on ¥3bn/100 Rooms, which worked back borrowing capacity from the buyer’s side using the same DSCR and interest rate, so properties and buyers can compare numbers on the same footing.

Source: Compiled by the HotelBank Editorial Team from MetroEngines Research data (ADR is the median of the September 2025–August 2026 average estimated settled ADR of properties randomly sampled from each band; N = number of properties with estimates for 6 months or more). Occupancy rates from the Japan Tourism Agency’s “Overnight Travel Statistics Survey,” 2025

To help read the table: in the band of ryokan with up to 19 rooms, with an average of 10.6 rooms, a median ADR of ¥13,700 and an occupancy rate of 38.1% (Japan Tourism Agency, 2025 ryokan average for January–December), median annual room revenue is ¥20.1 million, and even across the interquartile range it falls between ¥11.6 million and ¥34.4 million. Setting the source of repayment at 20% of revenue gives ¥4 million, and indicative borrowing of about ¥40 million. For ryokan with 20–49 rooms, median revenue is ¥56.1 million and indicative borrowing about ¥110 million. Business hotels in the same 49-rooms-or-fewer range, on the other hand, run at an occupancy rate of 75.3% (same source, January–December 2025) — nearly double that of ryokan — and convert more of their revenue into repayment capacity, so in the 20–49 room band their indicative borrowing is about ¥210 million, twice that of ryokan. Even though their absolute ADR is half that of ryokan, differences in occupancy and cost structure reverse the borrowing capacity — a relationship that collateral valuation does not reveal.

Source: Compiled by the HotelBank Editorial Team from MetroEngines Research data (simplified estimate based on this article’s assumptions)

On sensitivity: moving the repayment-source ratio by 5 points changes indicative borrowing by 25% for ryokan and 14% for business hotels. A property whose ADR sits at the lower quartile (¥7,100 for ryokan with 20–49 rooms) would see indicative borrowing fall to about ¥60 million under the same assumptions. Put the other way, a property that can disclose its monthly occupancy and ADR to its lender can show its source of repayment based on its own results rather than the property-type average, leaving room to secure better terms than this table suggests.

Sensitivity Analysis — Distance to the ¥80M Guarantee Limit in Three Scenarios and a Two-Axis Grid

Table 2 is a point estimate based on mid-range assumptions. Here we show three scenarios that move ADR position, the repayment-source ratio and the interest rate simultaneously, along with a two-axis sensitivity for ryokan with 20–49 rooms that varies occupancy and the repayment-source ratio. The pessimistic case assumes lower-quartile ADR, a repayment-source ratio 5 points lower and 3.0% interest; the optimistic case assumes upper-quartile ADR, a ratio 5 points higher and 1.5% interest. Average rooms, occupancy (Japan Tourism Agency, January–December 2025 average by property type), DSCR 1.3 and 15-year level amortization are the same as in Table 2.

Source: Compiled by the HotelBank Editorial Team from MetroEngines Research data and the Japan Tourism Agency’s “Overnight Travel Statistics Survey,” 2025 (pessimistic = lower-quartile ADR, repayment-source ratio −5pt, 3.0% interest; optimistic = upper-quartile ADR, ratio +5pt, 1.5% interest)

If only the interest rate is changed, the annual debt service rate for a 15-year level amortization loan is 7.49% at 1.5%, 8.08% at 2.5% and 8.38% at 3.0%, moving indicative borrowing by +3.8%, −3.6% and −7.1%, respectively, versus the 2.0% case. Compared with the repayment-source ratio (±25% for ryokan per ±5 points) and ADR position (for ryokan with 20–49 rooms, roughly 0.5x to 1.6x the median between the lower and upper quartiles), the effect of interest rates is noticeably smaller. What drives borrowing capacity is less the level of interest rates than how well a property can demonstrate its own rates and profit margins.

Source: Compiled by the HotelBank Editorial Team from MetroEngines Research data (simplified estimate based on this article’s assumptions)

For ryokan with 20–49 rooms, indicative borrowing stays within ¥80 million in only 2 of the 20 combinations: occupancy of 30% or 35% with a repayment-source ratio of 15%. With occupancy at the 2025 ryokan average (38.1%), even a 15% ratio gives about ¥83 million, above the limit. In this band, cases where a business-selected guaranteed loan alone can cover the funding need are few, and the realistic design is to cover up to ¥80 million with a guaranteed loan and combine the rest with guarantee-free proper (non-guaranteed bank) loans or JFC’s sanitation-industry (seiei) loans. Building the same table for ryokan with up to 19 rooms (avg. 10.6 rooms, ADR ¥13,651), even occupancy of 50% and a ratio of 30% gives about ¥78 million, so all 20 combinations fall within the limit. Apart from properties with upper-quartile ADR (the optimistic case in Table 3), the up-to-19-room band is one where a single guaranteed loan can meet the funding need.

Which Scheme Is Realistic for Which Size Band

Putting all of this together, the correspondence between schemes and size bands can be roughly summarized as follows. Ryokan with up to 19 rooms (4,921 properties) and 20–49 rooms (2,054 properties) have indicative borrowing of ¥40 million–¥110 million, overlapping with the ¥80 million unsecured insurance limit of the business-selected no-owner-guarantee scheme. In this band, a guarantor-free guaranteed loan is the most realistic option, provided the borrower is “a corporation,” “submits financial statements continuously” and “stays profitable at the level of ordinary income before depreciation,” and accepts the 0.20–0.40% fee surcharge (FY2026 applications, after the government subsidy). For ryokan with 20–49 rooms, however, as Table 4 shows, the funding need often exceeds the limit, and the portion above the limit must be combined with proper loans or JFC loans. Properties run as sole proprietorships are eligible for neither this scheme nor the enterprise value security interest, so incorporating at the time of succession is the entry condition.

Ryokan with 50–99 rooms (581 properties) and business hotels with 20–99 rooms (3,157 in total) have indicative borrowing of ¥200 million–¥500 million, entering territory where the portion above the guarantee limit is financed with proper loans. Given that 55.7% of new loans by private financial institutions are guarantee-free, it is no longer anything special for a property that meets the three requirements of the Guidelines (separation of corporate and personal assets, a strengthened financial base and transparent management) to obtain a guarantee-free proper loan. The enterprise value security interest is likely to be most effective in this band when properties with “small real estate valuations but strong customer bases and operating track records” raise funds for major renovations or for share acquisitions tied to succession. Ryokan and hotels with 100 rooms or more (3,674 in total) borrow more than ¥700 million, mainly through multi-bank syndications or in combination with existing real estate collateral, but the FSA FAQ also envisages borrowings in which multiple lenders create enterprise value security interests of equal rank. For properties that first need to restructure the terms of existing debt, Early Revitalization Act (Dec 2026): Ryokan Debt Reset by 3/4 Vote lays out the procedure for restructuring with the consent of three-quarters of creditors under the Early Business Revitalization Act, which takes effect on December 11, 2026.

In every band, JFC’s sanitation-industry loans (for members of sanitation trade associations, the promotion business loan offers up to ¥720 million for equipment funds with repayment within 20 years) remain available in parallel. As estimated in JFC Ryokan Loans: ¥720M Cap, 20 Years — 15 Rooms Need ¥74k ADR, some size bands would need an ADR in the ¥70,000 range to use up the JFC limit, so designing the capital structure in combination with private guarantee-free or guaranteed loans is the practical approach. As examples of succession funds, ¥220M Fund Hands 11-Room Onsen Inns to Newcomers (Shibu Onsen) and Kusatsu Onsen Funds: NBI Expands an Inn from 14 to 47 Rooms are also useful references for how to combine equity and debt.

Documents Properties Should Prepare — Aligning with the Income Capitalization Yardstick

To be evaluated on an income capitalization basis, a property needs to prepare documents that allow the lender to reproduce its source of repayment. The lodging edition of the FSA’s “Key Points for Industry-Specific Support” lists, as the first points for loan officers to check on a visit, “confirming the existence and granularity of sales information on accommodation, such as sales by room, guest numbers, sales by plan and customer information” and “confirming the existence and granularity of sales and profit/loss information by department (accommodation, banquets, restaurants, shops, tenant income, etc.),” and asks them to check five key facilities — piping, boilers, heating and cooling, elevators and rooftop waterproofing — noting that “aging can be described as a hidden liability.” Conversely, if a property prepares and presents these first, the foundation for evaluation is in place from the start of the review.

Source: Compiled by the HotelBank Editorial Team from the lodging edition of the FSA’s “Key Points for Industry-Specific Support” (March 2025) and the SMEA’s scheme outline

Summary

The FY2025 results — 55.7% of new loans by private financial institutions not relying on business owner guarantees, and successors not taking on a guarantee in 56.4% of CEO changes — show that in property succession, “whether to take over the personal guarantee” has become a negotiable issue. For guaranteed loans, the business-selected scheme has opened a path to dropping the guarantor for a fee surcharge of 0.25–0.45% (0.20–0.40% after the government subsidy in FY2026), and the enterprise value security interest, effective May 25, 2026, provides a framework in which even properties with small real estate valuations can present their customer base and operating track record as collateral value.

For properties with 49 rooms or fewer, which make up 60.9% of the 16,458 properties nationwide — and especially the small bands where 90.1% of ryokan are concentrated — indicative borrowing under this article’s assumptions is ¥40 million–¥110 million, overlapping with the ¥80 million limit for guaranteed loans. Ryokan with 50–99 rooms and business hotels with 20–99 rooms fall in the ¥200 million–¥500 million range, where guarantee-free proper loans and the enterprise value security interest become the main battleground. The condition common to every band is to keep submitting financial statements as a corporation and to be able to present monthly occupancy, ADR, departmental P&L and facility renewal plans in the property’s own terms. The conditions for wider succession financing are falling into place on the policy side; what remains is for properties to have documents aligned with the income capitalization yardstick. For tax-side support, see also Japan FY2027 Tax Requests: 15 Hotel Breaks, ¥120k–¥95m in Year One.

Frequently Asked Questions

Q. Can a ryokan run as a sole proprietorship use the business-selected no-owner-guarantee scheme or the enterprise value security interest?
A. Both are for corporations. The business-selected scheme is limited to “SMEs that are corporations,” and the enterprise value security interest to “stock companies and membership companies”; sole proprietors cannot create one. The entry point is to incorporate at the time of succession and prepare two fiscal years of financial statements.

Q. If I create an enterprise value security interest, can I borrow more than the collateral value of the building?
A. The FSA FAQ explains that whether to lend and how much is decided based on an assessment of the business plan and the funds required, and that the calculated enterprise value does not translate directly into the loan amount. It is best understood as a mechanism that removes the constraint of real estate valuation and lets you seek financing based on the viability of the business.

Q. How large is the guarantee fee surcharge?
A. For corporations that are not in excess of liabilities and whose ordinary income before depreciation has not been negative for two consecutive years, the surcharge is 0.25% on top of the standard rate; if only one condition is met, or if two fiscal years have not been closed since establishment, it is 0.45%. For applications from April 1, 2026 to March 31, 2027, the government subsidizes 0.05%, making the effective surcharge 0.20% or 0.40%.

Related Articles

• JFC Ryokan Loans: ¥720M Cap, 20 Years — 15 Rooms Need ¥74k ADR
• ¥220M Fund Hands 11-Room Onsen Inns to Newcomers: Shibu ADR ¥12.7k
• Kusatsu Onsen Funds: 14 to 47 Rooms, ¥17,600 ADR and Zoning Hurdles
• Japan FY2027 Tax Requests: 15 Hotel Breaks, ¥120k–¥95m in Year One