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Monday, December 23, 2019, 23:13
New government-backed funding plan for SMEs gets positive response
By Oswald Chan
Monday, December 23, 2019, 23:13 By Oswald Chan

The 90 percent guaranteed credit coverage now available under the SME Financing Guarantee Scheme (SFGS) has received an overwhelming positive market response since its inception last week, with over 30 applications and five already approved.

The new, 90 percent financing product for small and midsize enterprises was launched by the government-owned Hong Kong Mortgage Corp to provide financial help to the beleaguered SME business sector. The city government is backing the plan with a HK$33 billion (US$4.24 billion) guarantee.

Apart from business revenues, access to cash is the paramount issue that local SMEs face, so that this financial assistance program can help SMEs with a short business history to solve the cash-shortage gridlock

Edward Yau Tang-wah, Secretary for Commerce and Economic Development 

Each eligible enterprise can obtain a loan of up to HK$6 million, with a maximum guarantee period of five years and the same guarantee fee rate as the older, 80 percent guarantee product.

The new financing product aims to help smaller enterprises, businesses with relatively lower operating experience, and professionals seeking to set up their own practices to obtain aid from lenders participating in the program. The application period will continue through June 30, 2022.

“Apart from business revenues, access to cash is the paramount issue that local SMEs face, so that this financial assistance program can help SMEs with a short business history to solve the cash-shortage gridlock,” Commerce and Economic Development Secretary Edward Yau Tang-wah said.

“In the last 10 months, the application cases and approved fund amount for the 80 percent guarantee product under the SFGS have risen over 70 percent, with the total approval amount has reached over HK$70 billion (US$9.0 billion),” he added.

Hong Kong Mortgage Corp CEO Raymond Li Ling-cheung said, “Currently, five commercial banks with large market shares have joined the scheme, and we are discussing with another 20 locally incorporated banks to invite them to join.”

The commerce chief said that launching a 100 percent guarantee product under SFGS would involve public funds and other risk factors, so the government will need to gauge market situations before making any final decision on that.

oswald@chinadailyhk.com


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