HK okays new scheme to help SMEs in crisis

Source: Xinhua  |   2008-11-4  |     NEWSPAPER EDITION

HONG Kong's Legislative Council yesterday approved a new scheme to provide greater support to small and medium-size enterprises amid the global financial crisis.

Ten participating lending institutions were ready to take on new applications and enhancement measures in the SME Loan Guarantee Scheme, which will start on Thursday, according to the government.

The sub-ceilings for the Business Installations and Equipment Loans and Working Capital Loans will be removed while the overall guarantee cap for each SME will stay at HK$6 million (US$769,000). The maximum guarantee period for working capital loans will be extended from two years to five. Each SME can recycle the guarantee once after it has fully paid up the loan, so each SME can get a maximum guarantee of HK$12 million in its lifetime.

Under the new measures, the indicative ceiling of guarantee exposure for each participating lending institutions will be raised from HK$1.25 billion to HK$1.5 billion to provide them more "quota" in granting loans.

Local banks in Hong Kong began granting fewer loans to SMEs and imposed stricter rules for lending.

To avoid layoffs and bankruptcies among SMEs, the government has also pledged to help them.