The Hong Kong government has once again come to the aid of the city’s small and medium-sized enterprises as the city struggles with its worst recession on record amid the coronavirus pandemic.
As part of enhancements to its financing guarantee programme for SMEs, the maximum amount of loans has been doubled for eligible firms and the repayment period extended by two years starting from Friday.
Under the SME Financing Guarantee Scheme, small businesses can now avail of loans amounting to employee salaries and rents for 12 months from the previous six months, or HK$5 million (US$645,160), whichever is lower, HKMC Insurance, a wholly owned subsidiary of the Hong Kong Mortgage Corporation said.
The scheme allows the Hong Kong government to provide financing guarantees for SMEs to get loans from banks
The maximum repayment period for loans under the scheme has been increased to five years from three, while the size of loan the guarantee commitment has been increased to HK$70 billion from HK$50 billion.
“Borrowers with existing loans under the Special 100% Loan Guarantee can apply to their lending banks for increasing the loan amount and/or extending the repayment period if they deem appropriate, and in general no additional supporting documents will be required,” HKMC Insurance said.
The new aid to small businesses comes after the city’s economy shrank 9 per cent in the second quarter, extending a recession for four straight quarters.
Banks have voiced their support for the programme. Bank of China (Hong Kong) said it fully supports HKMC Insurance’s new measures, which will help to relieve the cash flow pressure on SMEs. The bank said it has approved more than 4,700 loans worth HK$7 billion under the scheme so far.
Standard Chartered also said it will actively support the new measures and continue to provide aid to its SME clients.
The government is going all out to help SMEs, which are among the biggest job creators in the city, to relieve financial pressure on these companies and minimise bankruptcies and lay-offs. Earlier this month, the Hong Kong Monetary Authority, the de facto central bank, had instructed banks
to extend their loan repayment holidays for small businesses for another six months until April 2021.
Any manufacturing business with fewer than 100 employees, or any non-manufacturing business with fewer than 50 people, can be defined as an SME.