Press Release 2008

Proposed enhancement measures to improve SME Funding Schemes
Saturday, October 18, 2008

In response to media enquiries regarding government's proposed enhancement measures to the Small and Medium Enterprises (SME) Funding Schemes, a government spokesman gave the following reply today (October 18):

With a view to strengthening support to the SMEs in the midst of the current financial turmoil, the government has proposed to introduce the following enhancement measures to improve the SME Funding Schemes:

For SME Loan Guarantee Scheme, the government proposes to -

1. do away with the sub-ceilings for Business Installations and Equipment Loan (BIE) and Working Capital Loan (WCL), while maintaining the overall maximum guarantee for each SME at $6 million. In other words, government's guarantee can be used to secure loans for either BIE only or WCL only, or a combination of both. This is to address the SMEs' concern that in the prevailing business climate their primary financial need is to get loans for working capital rather than to buy machines and equipment;
   
   
2. extend the maximum guarantee period for WCL from 2 years to 5 years,
   
   
3. increase the indicative ceiling of guarantee exposure for each participating lending institution (PLI) from $1.25 billion to $1.5 billion. As a few PLIs have nearly used up their indicative ceilings, increasing the ceiling can provide additional "quota" for these PLIs in granting loans; and
   
   
4. allow each SME to recycle the guarantee once after it has fully paid up the loan backed up by the guarantee. (Under current arrangement, each SME can only use the guarantee limit of $6 million once.)
   

For Export Marketing Fund, the government proposes to -

1. increase the overall grant ceiling for each SME from $100,000 to $150,000, and the sub-ceiling for each successful application from $30,000 to $50,000; and
   
   
2. extend the reimbursable items to include expenditure on advertisements placed on the websites of exhibition organisers, as well as advertisements placed on printed trade publications targeting export markets (i.e. to relax the existing requirement that the publications must be published by exhibition organisers).
   

The spokesman added that the government will further elaborate the details of the enhancement measures in the Legislative Council Panel on Commerce and Industry to be held next Tuesday. Subject to Members' views, the government will proceed to seek Finance Committee's approval to the aforesaid recommendations. Subject to the approval of Finance Committee, the government will implement the enhancement measures as soon as possible upon completion of the necessary legal procedures with the PLIs.

Ends