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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
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Press Release 2008

$100 billion Special Loan Guarantee Scheme set to launch next Monday
Friday, December 12, 2008

Following approval by the Finance Committee of the Legislative Council (FC) today (December 12) for the Government to set up a $100 billion Special Loan Guarantee Scheme, the Trade and Industry Department (TID) will start to accept applications from the participating lending institutions (PLIs) next Monday (December 15). 

The Chief Executive announced on December 8 that the total amount of Government guarantee under the Special Loan Guarantee Scheme would be increased from $7 billion to $100 billion, which would help to make available loans of about $142 billion in the commercial lending market. Depending on the actual loan size, the enhanced scheme is expected to benefit about 40,000 companies. 

Under the Special Loan Guarantee Scheme, the Government will provide 70% guarantee for loans granted by the PLIs. The maximum amount of loan that each enterprise may obtain is $6 million, within which $3 million can be used as a revolving credit line.

The maximum guarantee period for each loan is three years, or up to June 30, 2012, whichever is earlier. A grace period of six months will be allowed, during which the borrower may repay the interest only. Thereafter, the loan should be repaid over a maximum of 30 months. 

"With the Government assuming a larger share of default risk, we expect the PLIs to be more forthcoming in granting credit facilities, particularly to the SMEs, while remaining professional and prudent in vetting and processing the loan applications," a TID spokesman said.

"The provision of a revolving credit line will provide greater flexibility to the companies and help inject more liquidity into the market," the spokesman added.

All companies registered and with substantive business in Hong Kong are eligible to apply, except listed companies, irrespective of industry or size of business. Application is open for six months starting from next Monday. 

As at today, six PLIs, including Bank of East Asia, Hang Seng Bank, Standard Chartered Bank, Dah Sing Bank, The Hongkong and Shanghai Banking Corporation and Bank of China have completed the legal procedures with the Government and are ready to accept applications under the scheme. A list of the PLIs can be found on the website www.smefund.tid.gov.hk. Information on the website will be updated from time to time as more PLIs sign up to join the scheme.

"We expect the number of PLIs will increase in the coming weeks when more of them have completed the legal procedures," the spokesman said.

All applications under the Special Loan Guarantee Scheme should be submitted through the PLIs. The TID will start to accept applications from the PLIs on December 15.

Ends