HKMA on Enhancement Measures to 80% and 90% Guarantee Product for SMEs
HKMA announced that the enhancement measures to the 80% and 90% Guarantee Products under the Small and Medium-Sized Enterprise (SME) Financing Guarantee Scheme takes immediate effect. The enhancement measures were included in the second round of the Anti-epidemic Fund announced by the government in April 2020. The measures include raising the maximum loan amount of the 80% and 90% Guarantee Products and extending the eligibility coverage to listed companies in Hong Kong. In addition, both the existing guaranteed loans and new applications are eligible for an interest subsidy for a maximum period of 12 months, the payments of which will start to be made by the end of June this year.
Under the enhancement measures, the maximum loan amount per enterprise for the 80% Guarantee Product has been increased from HKD 15 million to HKD 18 million, while the loan amount for the 90% Guarantee Product has been increased from HKD 6 million to HKD 8 million. All borrowing enterprises under the scheme can benefit from the enhancements. In addition, for the requirement of personal guarantee by individual shareholder(s) under the Special 100% Loan Guarantee, applicable percentage of equity interest is being reduced from over 70% to over 50%, which is in line with that for the 80% and 90% Guarantee Products.
The government will provide interest subsidy for the 80% and 90% guaranteed loans, with the amount of subsidy subject to a cap of 3%. Each loan is entitled to an interest subsidy for up to 12 months. HKMC Insurance Limited (HKMCI) has reached a consensus with the government and the lenders on the following implementation details:
- All outstanding loans as of April 30, 2020 will receive the first batch of interest subsidy for up to 3 months, of which payment will be successively made starting from the end of June 2020. The list of lenders that will make payments of interest subsidy by the end of June 2020 has been included in the Annex to the HKMA notification.
- Payment of subsequent interest subsidy will be made on a monthly basis thereafter.
- Interest subsidy is applicable to new loan applications successfully submitted before May 31, 2021.
Keywords: Asia Pacific, Hong Kong, Banking, COVID-19, Credit Risk, Guarantee Scheme, SME, Regulatory Capital, HKMCI, HKMA
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