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The government of the Hong Kong Special Administrative Region (HKSAR) announced Monday that a 10 billion HK dollars (1.29 billion U.S. dollars) in liquidity will be provided to the commercial lending market for small and medium-sized enterprises (SMEs).
The HKSAR government will provide a 70 percent guarantee to the loans granted by the participating lending institutions and its guarantee commitment will be 7 billion HK dollars. The maximum amount of loan that each SME can obtain from a participating lending institution is 1 million HK dollars.
Within the maximum amount of 1 million HK dollars credit facility for each SME, up to 500,000 HK dollars can be used as revolving credit. The government's guarantee ceiling for this revolving credit facility will continue to be 70 percent.
A six-month repayment grace period will be provided to borrowers during which they can pay back the interest only. Thereafter the loan will be repaid over a maximum of 24 months.
All SMEs which have been registered in Hong Kong for one year or more, regardless of their industry or business types, are eligible to apply. Application is open for six months starting from the implementation date.
Subject to approval by the Finance Committee of the Legislative Council, the proposed scheme is expected to come into operation in December.
Speaking to reporters Monday afternoon, Financial Secretary of the HKSAR government John Tsang said the Government is highly concerned about the difficulties faced by SMEs with the present liquidity crunch.
He said that he hoped the measures will give SMEs more flexibility and convenience in obtaining necessary cash flow to maintain their operation and get access to new markets.
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