Special 100% Loan Guaranteed Scheme for SMEs in Hong Kong

In the Budget 2020-2021, the Financial Secretary announces that HKMC Insurance Limited (HKMCI) will introduce special 100% Loan Guaranteed Scheme. The load Guarantee is under the SME Financing Guarantee Scheme (SFGS). The new measure aims to alleviate the burden of paying employee wages and rents by small and medium-sized enterprises (SMEs).  For those are suffering from reduced income, thereby help minimise enterprise shutting down and layoffs.

Who is Eligiable?

The loan guarantee is applicable to SMEs in all sectors. Including those mostly affected by the coronavirus outbreak such as retail outlets, travel agents, restaurants, cinemas, karaoke establishments and transport operators, etc. The government will guarantee the loan, with a total loan amount of HK$20 billion.  Eligible enterprises started operation for at least three months as at end of December 2019. And financially suffered at least a 30% decline in sales turnover in any month since February 2020. By comparing with the monthly average of any quarter in 2019.

What is the Loan Amount and Repayment?

The maximum amount of the loan per enterprise is the total amount of employee wages and rents for six months, or HK$2 million, whichever is lower. There will be a charge of interest rate of the Prime Rate minus 2.5% per annum (i.e. current interest rate at 2.75%). All guarantee fee will be waived. The maximum repayment period of a loan under the guarantee is 36 months, with an optional principal moratorium for the first six months, so as to lessen immediate repayment burden of the enterprises.

HKMCI is actively undertaking the preparatory work with the lending institutions, and strives to roll out the scheme within one month after the Government obtains approval of funding from the Finance Committee of the Legislative Council. The application period will last for six months starting from the launch of the scheme. And the date for receiving applications will be further announced upon finalization.

Still, it is a proposal. It needs an approval from Legislative Council.

For further information, please contact us.

You may want to read: http://centreo.hk/hong-kong-funding-scheme-for-business-development/


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