The Hong Kong Mortgage Corporation Limited ("HKMC") launched the SME Financing Guarantee Scheme ("Scheme") in January 2011. The Scheme aims to help small and medium-sized enterprises and non-listed enterprises obtain loans from participating lenders such as banks for meeting their business needs so as to enhance their productivity and competitiveness in the rapidly changing business environment. Under the Scheme, the HKMC will provide guarantee coverage on 50%, 60% or 70% of the facility amount to eligible enterprises. With the Government's support, the HKMC introduced the time-limited Special Concessionary Measures under this Scheme on 31 May 2012 providing 80% guarantee protection to eligible loan facilities. The application period is 9 months up to 28 February 2013.
Eligible enterprises must have business operation in Hong Kong and be registered in Hong Kong under the Business Registration Ordinance (Chapter 310). They must also have business operation for at least one year on the date of guarantee application, and have good loan repayment record. Listed companies, lending institutions and affiliates of the lender are not eligible for the Scheme.
The Scheme guarantees both term loan and revolving credit facility. An enterprise can borrow a term loan and a revolving credit facility at the same time. There is no limitation on the proportion between the two types of facilities. The loans must be used for providing general working capital for the enterprises' business operations, acquisition of equipment or assets in relation to the enterprises' business or refinancing any facilities with a guarantee issued under the Scheme or under the Special Loan Guarantee Scheme operated by the Trade and Industry Department.
Each enterprise or each group of enterprises can borrow not more than HK$12 million under the Scheme and the maximum loan tenor is five years. In general, the Scheme mainly covers loans with interest rate up to 10% per annum. But it will also consider applications with interest rate exceeding 10% per annum on a case-by-case basis.
Under the Scheme, the HKMC will provide guarantee coverage on 50%, 60% or 70% of the amount of the eligible loan facilities; while under the Special Concessionary Measures, the HKMC will provide guarantee coverage on 80% of the amount of eligible loan facilities for eligible enterprises.
The annual guarantee fee ranges from 0.5% to 4.2% of the loan amount / facility limit; while under the Special Concessionary Measures the annual guarantee fee ranges from 0.5% to 1.44% of the loan amount / facility limit. Enterprises can pay the guarantee fee in one lump-sum upfront or by annual payments.? Enterprises should contact the participating lenders to discuss their financing needs. The participating lender will assess the application based on its lending criteria and the financing needs of the enterprise.
Startup is now co-operating with the following banks on the SME Financing Guarantee Scheme, provide consulting service on financing to our existing/ potential clients. Should you have any inquiries, please contact us for details.