HKMC wants more SMEs borrowing from government-backed fund
(19 July 2016 – Hong Kong) Hong Kong Mortgage Corporation (HKMC) has introduced a range of measures to encourage more small-and-medium sized companies to borrow from the HK$120 billion (A$20.7 billion) government guarantee programme.
According to reports, the number of applications from the HKMC SME Financing Guarantee Scheme has dropped by 37 percent in the first half of 2016. In terms of funding amount, it was down to HK$1.32 billion, compared to HK$1.87 billion a year earlier.
HKMC chief executive Raymond Li Ling-cheung said: “Many SMEs were reluctant to borrow in the first half of this year due to the mainland economic slowdown and the worry over the outlook after the Brexit in June,” Li said.
“If SMEs don’t want to borrow money, we can’t do anything to help them. But for those SMEs that want to borrow money and have found it hard to borrow from banks, we want to encourage them to use the programme which could lend up to HK$80 billion with the government guarantee of up to HK$65 billion,” he said.
The government scheme was launched in December 2008, with HK$100 billion after the financial crisis hit the US and Europe.
Under the scheme, the government provides an 80 percent guarantee to 30 commercial banks so they can lend money to SMEs which do not have sufficient assets to secure bank loans. However, it hasn’t been popular since its launch, with only around one-third of its guarantee quota being allocated, totalling HK$35 billion.
Li said banks were unwilling to promote the loans as payback times were too lengthy. However, following discussions with banks an agreement has been reached to pay back loans in 100 days, down from the 500 at launch, and to simplify the required documentation.
“The HKMC has made improvements to the scheme to encourage banks to promote the type of lending. Several big banks such as Bank of China (Hong Kong) has agreed to encourage more of the lending under the programme.”
“We want to let more SMEs know that the scheme could still offer about HK$80 billion in bank loans for them. This would help them get through the difficult economic times at the moment,” he said, adding that the HKMC would connect with more SME organisations to promote the scheme.
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