Helping SMEs to market

Giving a further boost to small enterprises, HKMC Insurance Limited (HKMCI), a wholly owned subsidiary of the Hong Kong Mortgage Corporation, has announced that the Special 100% Loan Guarantee under the SME Financing Guarantee Scheme (SFGS) will start receiving applications from Monday, 20 April.

HKSAR Financial Secretary Paul Chan said: “I announced the introduction of the Special 100% Loan Guarantee in the 2020-21 Budget, with the objective of easing the cash flow problems of enterprises adversely affected by the COVID-19. In light of the prolonged impact of the COVID-19 on the economy, the second round of the Anti-epidemic Fund further enhances the Special 100% Loan Guarantee, thereby benefitting more enterprises. We believe the launch of the Loan Guarantee will be a timely response to the pressing needs of many enterprises."

HKMCI welcomes all lenders under the SFGS to participate in the Special 100% Loan Guarantee and the following lenders will receive applications: Bank of China (Hong Kong), Bank of Communications (Hong Kong), Chong Hing Bank, DBS Bank (Hong Kong), Hang Seng Bank, Nanyang Commercial Bank, OCBC Wing Hang Bank, Standard Chartered Bank (Hong Kong), The Bank of East Asia and HSBC. Other lenders have indicated their interest in joining.

The Special 100% Loan Guarantee is applicable to all sectors. The loans will be fully guaranteed by the government. Eligible enterprises should have been operating for at least three months as at the end of December 2019, and have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019. Interest will be prime minus 2.5 percentage points (which puts the current rate at 2.75%). All guarantee fees will be waived. Loans are capped at the rent and employee wage bill for six months or HK$2 million, whichever is lower. Enterprises may also apply for a six-month principal moratorium to alleviate instant burden on repayment. Subject to approval of funding by the Finance Committee of the Legislative Council, the maximum loan amount per enterprise will be increased to HK$4 million, and the principal moratorium arrangement will be extended to the first 12 months.

The government will further enhance two programmes – the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) and the SME Export Marketing Fund (EMF). The Hong Kong Export Credit Insurance Corporation (HKECIC) has also launched a new round of measures to support the export trade of Hong Kong. All the new enhancement measures will be rolled out within this month to provide timely assistance to enterprises.

HKSAR Secretary for Commerce and Economic Development Edward Yau said: “Hong Kong’s economy is in a severe situation. The US-[Mainland] China trade conflict since 2018, the social incidents in the latter half of 2019 and the COVID-19 outbreak together pose unprecedented challenges to the business environment. Notwithstanding that the government has since last year launched several rounds of relief measures and substantially raised funding support to help shore up affected enterprises, having regard to the rapidly deteriorating business environment, we consider it necessary to introduce further support measures to tide enterprises over this difficult time and get well prepared for long-term economic development. The new enhancements represent the government's positive responses to views put forward recently by the business sector.”

For the BUD Fund, the cumulative funding ceilings for each enterprise to undertake projects in the mainland; and projects in other economies with which Hong Kong has signed Free Trade Agreements, were HK$2 million respectively. The government has now removed these two individual ceilings in order that enterprises can flexibly use the total funding of up to HK$4 million to expand into those markets.