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CE accepts SMEC's recommendations on means to further enhance the effectiveness of the four SME funding schemes
Saturday, December 14, 2002

The Chief Executive, Mr. Tung Chee Hwa, today (December 14) announced his decision to accept all the recommendations of the Small and Medium Enterprises Committee (SMEC) on means to further enhance the effectiveness of the current SME funding schemes. In gist, the SMEC recommends the following major improvements:

- For the SME Business Installations and Equipment Loan Guarantee Scheme (BIG) scheme

  1. expand the scope of Government's guarantee to include working capital loan, in addition to business installations and equipment loan. Two types of working capital loans will be covered by Government's guarantee. The first type of loans are those for SMEs to meet increases in operational expenses as a result of an increase or enhancement in business installations and equipment. The second type is accounts receivable loans. The maximum amount of Government's guarantee for each type of working capital loans will be $1 million per SME, and the maximum guarantee period will be two years;

  2. increase the maximum amount of business installations and equipment loan guarantee per SME from $1 million to $2 million;

  3. extend the guarantee period for each business installations and equipment loan from three years to five years;

Under the revised BIG, an SME which purchases business installations and equipment and which has accounts receivable in hand may receive up to a maximum amount of $4 million guarantee from the Government, as follows:

* a maximum of $2 million guarantee for business installations and equipment loan (or 50 per cent of the loan, whichever is the less)

* a maximum of $1 million guarantee for conditional working capital loan (or 50 per cent of the loan, whichever is the less)

* a maximum of $1 million guarantee for accounts receivable loan (or 50 per cent of the loan, whichever is the less)

On the other hand, an SME which do not purchase business installations and equipment but has accounts receivable in hand may receive a maximum of $1 million guarantee for accounts receivable loans (or 50 per cent of the loan, whichever is the less).

- For the SME Export Marketing Fund (EMF) scheme

  4. increase the maximum amount of grant an SME may receive under the EMF from $10,000 to $40,000;

- For the SME Training Fund (STF) scheme

  5. increase the maximum amount of grant an SME may receive under STF from $15,000 to $30,000; and

  6. allow SMEs to submit applications for STF either before or after the commencement of the training courses.

To sum up, an SME may receive a maximum amount of guarantee/grant of $4.07 million under the three improved schemes, compared to $1.025 million under the existing schemes.

The improvement measures will also apply to current users of the schemes. A spokesman for the Commerce, Industry and Technology Bureau said : "We are grateful to the SMEC for its proposed improvement measures, to the SME funding schemes which we believe would meet the needs of SMEs more fully and effectively."

"The Government will, in consultation with the SMEC, start working on the implementation details of these proposed improvement measures. We aim to seek the approval of the Finance Committee of the Legislative Council shortly, with a view to implementing the improvement measures as early as possible," the spokesman said.

Copies of the review report are available at the Support and Consultation Centre for SMEs of the Trade and Industry Department (TID). It can also be viewed on TID's website at www.smefund.tid.gov.hk.

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