HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021. These actions are intended to further alleviate the cash flow pressure on small and medium-size enterprises (SMEs). The maximum amount of loan per enterprise will be raised from the total amount of employee wages and rents for 12 months to that for 18 months, or HKD 6 million (originally HKD 5 million), whichever is lower. Meanwhile, the maximum repayment period of the guaranteed loans will be increased from 5 years to 8 years and the principal moratorium arrangement will be extended from up to 12 months to up to 18 months.
To benefit from these enhancements, eligible enterprises should have been operating for at least three months as at June 30, 2020 and should have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter from early 2019 to mid-2020. HKMC Insurance Limited is proactively undertaking the preparatory work with the lending institutions and strives to roll out these enhancement measures within one month. The implementation date will be announced later. By that time, borrowers with the existing loans may apply to their lending institutions for increasing the loan amount, extending the repayment period, and/or extending the principal moratorium period if they deem appropriate. In general, no additional supporting documents will be required.
Keywords: Asia Pacific, Hong Kong, Banking, Loan Guarantee, Credit Risk, Payment Deferrals, SME, COVID-19, HKMA
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