Hong Kong Monetary Authority Announces Enhancements to SME Financing Guarantee Scheme

The Hong Kong Monetary Authority (HKMA) notes that they have made enhancements to the SME Financing Guarantee Scheme.

The Financial Secretary confirmed in the 2022-23 Budget today (23 February) that the application period for the 80% Guarantee Product, the 90% Guarantee Product and the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) will be “extended to 30 June 2023.”

In addition, in order to further alleviate the cash flow pressure of SMEs in the time of the pandemic, the maximum loan amount per enterprise under the Special 100% Loan Guarantee will be “raised from the total amount of employee wages and rents for 18 months to that for 27 months, subject to a ceiling of HK$9 million (originally HK$6 million), and the maximum repayment period will be extended from eight years to ten years.”

Having regard to the new arrangement by the Hong Kong Monetary Authority and the banking sector to further extend the Pre-approved Principal Payment Holiday Scheme, HKMC Insurance Limited (HKMCI) will also “extend the principal moratorium arrangement under the SFGS by six months to a total of 30 months, and the application period for principal moratorium will be extended to end-December 2022.”

Meanwhile, an option for borrowers to again start making partial principal repayment for one year will be provided, “allowing borrowers to resume normal repayment gradually if they are willing and capable.” Whether a borrower chooses the principal moratorium arrangement or the partial principal repayment option, “the loan tenor and the guarantee period will generally be extended accordingly,” the update clarified.

The HKMCI will “follow up on the implementation details with the lending institutions and strive to roll out the above measures in around one and a half months,” the announcement noted while adding that the effective date and details “will be further announced.”

The Government announced on February 26, 2022 that in view of the latest developments of the COVID-19 epidemic, it has “decided to postpone the launch of the inaugural retail green bond offering, for which the subscription period was originally scheduled for March 1 to 11.”

A spokesman for the Government stated:

“The preparation work for the launch of the inaugural retail green bond has been completed. However, as Hong Kong is now at the critical juncture in fighting the epidemic, we have decided to postpone the subscription period and issuance of the inaugural retail green bond in order to avoid the social contact arising from the application process and reduce the risk of the spread of the disease, which will be conducive to containing the epidemic situation. We thank all participating institutions for their efforts in preparing for the issuance, and appreciate the understanding of the public who are preparing to participate in the subscription.”

For more details on this announcement, click here.

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