Press Release 2008

Higher guarantee and grant ceilings for Small and Medium Enterprise Funding Schemes
Tuesday, February 26, 2008

The Trade and Industry Department (TID) announced today (February 26) that a series of enhancement measures for the Small and Medium Enterprise (SME) Funding Schemes will be implemented from March 3, 2008. The maximum amount of guarantee under the SME Loan Guarantee Scheme (SGS) will be increased from $4 million to $6 million, and the maximum amount of grant under the SME Export Marketing Fund (EMF) will be increased from $80,000 to $100,000.

The Finance Committee of the Legislative Council approved last month an injection of $500 million into the SME Funding Schemes, of which $350 million will be injected into the EMF and the SME Development Fund (SDF), and $150 million into the SGS (raising the total government guarantee commitment from $10.6 billion to $12.6 billion, assuming a default rate of 7.5%).

Under the SGS, the maximum amount of guarantee for an SME will increase from $4 million to $6 million, which includes (i) a guarantee ceiling of $5 million (increased from $2 million) for Business Installations and Equipment Loans (BIE); and (ii) a new Working Capital Loan (WCL) with a guarantee ceiling of $1 million. 

To help SMEs participate in promotion activities to expand access to markets outside Hong Kong, the accumulated grant ceiling for each SME under the EMF will be raised from $80,000 to $100,000. The grant ceiling for each application will remain at $30,000. The scope of the EMF will also be expanded to include expenditure for advertisements on trade promotion publications.

"The new arrangements will enhance support to SMEs, particularly those with operations on the Mainland, to meet the challenges arising from the Mainland's 11th Five Year Plan, such as the recent adjustments in the Mainland's processing trade policy and the need to comply with environmental standards. The much higher guarantee ceiling of BIE under the SGS will help enterprises obtain finance for business installations and equipment for upgrading, restructuring or relocating their operations. The new WCL can provide greater flexibility to address the needs of SMEs, especially those in the service sector. The higher grant ceiling and the expanded scope of EMF will encourage more SMEs to develop the Mainland and overseas markets by participating in more market promotion activities," a TID spokesman said. 

"The continued operation of the three SME Funding Schemes and the enhanced measures for the SGS and EMF have the full support of the Small and Medium Enterprises Committee," the spokesman added.

The new measures will take effect from March 3. Application forms and guidelines for the revised SGS and EMF are available at the Trade and Industry Department, District Offices, major SME support organisations and major exhibition organisers. They can also be downloaded from the website, www.smefund.tid.gov.hk. For enquiries, please call 2398 5125.

The Government set up the SME Funding Schemes in December 2001/January 2002 to help SMEs rise to new challenges and opportunities. The SGS aims to help SMEs secure loans from participating lending institutions for acquiring business installations and equipment and meeting working capital needs. The EMF aims at helping SMEs expand their businesses through participating in export promotion activities. The SDF aims at subsidising projects carried out by SME supporting organisations, trade and industrial organisations, professional bodies and research institutes to enhance the competitiveness of SMEs in general or in specific sectors. 

As at end December 2007, over 10,000 SMEs had obtained finance (totalling over $21 billion, of which over $9 billion was covered by Government guarantee) under the SGS; about 20,000 SMEs have received grants totalling over $830 million from the EMF. As regards the SDF, over 100 projects, involving a total grant of about $120 million, have been approved.

Ends