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Special 100% Loan Guarantee Scheme Open for Applications in Hong Kong
The Special 100% Loan Guarantee will start receiving applications from April 20, 2020 onwards. This has been announced under the SME Financing Guarantee Scheme by the HKMC Insurance Limited company, a wholly-owned subsidiary of the Hong Kong Mortgage Corporation Limited.
The Financial Secretary has said, “I announced the introduction of the Special 100% Loan Guarantee in the 2020-21 Budget, with the objective of easing the cash flow problems of enterprises adversely affected by the COVID-19. In light of the prolonged impact of the COVID-19 on the economy, the second round of the Anti-epidemic Fund further enhances the Special 100% Loan Guarantee, thereby benefitting more enterprises. We believe the launch of the Loan Guarantee will be a timely response to the pressing needs of many enterprises.”
Lenders under the SME Financing Guarantee Scheme are welcome to participate in the Special 100% Loan Guarantee. Thus far, the following lenders have received applications:
- Bank of China (Hong Kong) Limited
- Bank of Communications (Hong Kong) Limited
- Chong Hing Bank Limited
- DBS Bank (Hong Kong) Limited
- Hang Seng Bank Limited, Nanyang Commercial Bank
- OCBC Wing Hang Bank Limited
- Standard Chartered Bank (Hong Kong) Limited
- The Bank of East Asia
- The Hongkong and Shanghai Banking Corporation Limited.
More lenders will be expected to join.
Eligibility for Special 100% Loan Guarantee
The loan is applicable to all sectors and will also be fully guaranteed by the Hong Kong Government.
Conditions for the loan include:
- Applicant business should have been operating for at least three months from late December 2019.
- Applicant business suffered at least a 30 percent decline in sales turnover in any month since February 2020, this is then compared with the monthly average of any quarter in 2019.
- A Prime Rate interest rate minus 2.5 percent per annum (ie. current interest rate at 2.75 per cent) will be charged.
- All guarantee fees will be waived under the loan.
- The maximum amount of the loan per applicant enterprise is the total amount of employee wages and rents for six months, or HK$2 million (whichever is lower).
- Pursuant to the above, if an enterprise does not have employee(s) and/or rented office(s), the calculation may be replaced by half of the 2019 previous maximum monthly net income.
- Applicant enterprises can also apply for an optional key moratorium for the first six months in order to reduce the immediate repayment burden, but this is subject to approval by the Finance Committee of the Legislative Council.
- Pursuant to the above, the maximum loan amount per enterprise will be increased to HK$4 million, while the principal moratorium arrangement can be extended to the first 12 months.
For further information, enterprises are advised to call the scheme’s dedicated hotline at 2536 0392.