Hong Kong’s small and medium-sized companies can defer their principal loan payments between May 1 and Oct 31, the Hong Kong Monetary Authority said in a statement on Friday.
All corporate customers which have an annual sales turnover of HK$800 million or less, which is estimated to cover more than 80 percent of all corporate borrowers in Hong Kong (and which have no outstanding loan payments overdue for more than 30 days), are eligible for the scheme, the HKMA said
The HKMA, together with the Banking Sector SME Lending Coordination Mechanism, announced the launch of a Pre-approved Principal Payment Holiday Scheme for eligible corporate customers.
All corporate customers which have an annual sales turnover of HK$800 million or less, which is estimated to cover more than 80 percent of all corporate borrowers in Hong Kong (and which have no outstanding loan payments overdue for more than 30 days), are eligible for the scheme, the HKMA said.
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All loan principal payments of eligible customers due within a six-month period between May 1 and Oct 31 will be pre-approved for deferment, it added.
Principal payments of loans (including revolving facilities) will generally be deferred by six months, whereas trade facilities, given their short-term nature, will be deferred by three months, the HKMA explained.
Banks will begin informing eligible customers of pre-approval under the scheme as soon as is practicable. Eligible customers do not need to apply. They only need to contact the bank within 14 days of the bank’s notice to confirm the detailed arrangements of the principal payment holiday, it said.
The HKMA also said has issued a circular requesting all banks to participate in the scheme; it has received support from all the 11 major lenders in the coordination mechanism.
The Banking Sector SME Lending Coordination Mechanism was established by the HKMA in October 2019. Participating banks have expanded from the nine banks most active in SME lending to now include 11 banks.
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The Hong Kong Association of Banks and the HKMC Insurance Limited are represented in the mechanism. Since its establishment, the mechanism has implemented four rounds of relief measures for corporate and retail customers. This includes principal payment holidays for SMEs and residential mortgages, loan tenor extensions, and the conversion of trade financing lines into temporary overdraft facilities.
The measures have worked as intended. By the end of March 2020, nearly 9,000 SME applications for relief measures have been approved by banks active in SME financing, amounting to over HK$57 billion.
Banks have approved over 2,800 principal payment holiday applications for residential mortgages and emergency personal loans - involving an aggregate amount of over HK$8 billion.
