Press Release 2008
Finance Committee approves enhancement measures to SME Funding Schemes
Tuesday, October 28, 2008
The Finance Committee of the Legislative Council approved today (October 28) a series of enhancement measures to the SME Funding Schemes. The enhancement measures aim to provide greater support to SMEs in the midst of the global financial turmoil.
Under the SME Loan Guarantee Scheme (SGS), the sub-ceilings for the Business Installations and Equipment Loans and Working Capital Loans will be removed, while the overall maximum amount of guarantee for each SME is maintained at $6 million. In addition, the maximum guarantee period for WCL will be extended from two years to five years. Each SME will also be allowed to recycle the guarantee once after it has fully paid up the loan backed by the guarantee, which means each SME will be able to obtain a maximum amount of guarantee of $12 million in its lifetime. Moreover, the indicative ceiling of guarantee exposure for each participating lending institution (PLI) will be increased from $1.25 billion to $1.5 billion in order to provide more "quota" for the PLIs in granting loans.
As for the SME Export Marketing Fund (EMF), the overall grant ceiling for each SME will be increased from $100,000 to $150,000, and the sub-ceiling for each successful application will be increased from $30,000 to $50,000. The scope of reimbursable items is also extended to include expenditure on advertisements placed on the websites of exhibition organisers, as well as advertisements placed on all printed trade publications targeting export markets (i.e. to relax the existing requirement that the printed publications must be published by exhibition organisers).
"In recent months, many SMEs in Hong Kong are hard hit by the global financial turmoil. In particular, a number of SMEs are facing liquidity problems. The enhancement measures aim to provide more flexibility to the SMEs in obtaining and repaying loans," a Trade and Industry Department (TID) spokesman said.
The spokesman added that the much higher guarantee ceiling for the Working Capital Loans should be able to address the SMEs' concern that in the prevailing business climate their primary financial need was to get loans for working capital rather than to buy machines and equipment. It should also enhance support to SMEs in the service sector.
"As for the increased ceilings under the EMF, it would help SMEs get new orders and develop alternative markets, as well as alleviate some of their costs in carrying out promotion activities," the spokesman said.
"The enhancement measures have the full support of the Small and Medium Enterprises Committee," the spokesman explained.
The enhancement measures for the EMF will take effect from November 3. Application forms and guidelines for the EMF are available at the TID and can also be downloaded from the website: www.smefund.tid.gov.hk. For enquiries, please call 2398 5125.
For the SGS, the enhancement measures will take effect once a reasonable number of PLIs have signed the legal documents with the Government. The TID will separately announce the implementation date and the PLIs involved. All applications for the SGS should be submitted through the PLIs.
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 PLIs 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 such as exhibitions and business missions.
As at end September 2008, the SGS has approved over 20,000 applications, covering a total guarantee amount of $10.32 billion. For the EMF, nearly 60,000 applications have been approved, involving a total grant of $967 million.
Ends