Hong Kong’s new banking policies to support SMEs

As Hong Kong’s economy struggles to cope with the coronavirus, many SMEs are vulnerable to running short of funds. To combat the epidemic and help keep smaller enterprises afloat, the HKSAR Government and the city’s leading banks have launched several fiscal countermeasures.

As outlined in the 26 February budget, the Hong Kong Mortgage Corporation Insurance will introduce a special 100 percent loan guarantee under the SME Financing Guarantee Scheme (SFGS). Under this initiative, SMEs suffering from reduced income will have less financial pressure upon their salary and rent payments, hence lowering the risk of a firm shutdown and staff layoffs. According to the Hong Kong Monetary Authority, the government loan guarantee (worth HK$20 billion) will be applicable to SMEs across all sectors – the maximum loan amount per enterprise will be equal to the total amount of employee wages and rent for six months (up to HK$2 million) under an interest rate of prime minus 2.5 percent per year, with all guarantee fees waived. 

HSBC also announced that it will issue immediate liquidity relief of more than HK$30 billion to aid businesses of all sizes and sectors over the coming months. New applicants for loan products under the SFGS, including the 90 percent guarantee product, are entitled to a waived handling fee as well as a subsidy for guarantee fees.

For a more in-depth look at the financial support available to Hong Kong SMES during these challenging times, click here.

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