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Microfinance Scheme

Microfinance Scheme

Can Help to Realise Your Dream

Introduction

The Hong Kong Mortgage Corporation Limited (HKMC) launched the Microfinance Scheme (Scheme)

in collaboration with banks and non-governmental organisations (NGO) in June 2012.

 

The Scheme aims to offer Micro Business Start-up Loans, Self-employment Loans and Self-enhancement Loans 

to assist people who wish to start their own businesses, become self-employed or

achieve self-enhancement through training, upgrading of skills or obtaining professional certification.

 

The Scheme will provide supporting services including mentorship and referral to entrepreneurial training

to entrepreneurs and self-employed persons as required in order to enhance their ability in running business 

and also help them to resolve problems in their daily business operations.

 

Case Interview (Chinese Version Only)
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Eligibility Criteria

Eligibility Criteria

 

Micro Business Start-up LoanSelf-employment Loan Self-enhancement Loan
Applicant(s)/
Guarantor
(if applicable)
  • Individual aged 18 or above and holder of Hong Kong Identity Card (with the right of abode, right to land or right to stay in Hong Kong without restrictions) or a One-way Permit
  • Not subject to any bankruptcy order or proceedings at the time of application
Relevant Requirements
  • Business may be conducted in the form of sole-proprietorship, partnership or limited company incorporated in Hong Kong
  • If the business is owned by more than one person, all partners and business owners must be co-borrowers (The maximum number of borrowers is three).

The course should be related to business start-up or career development. Eligible courses /examinations include:

 

1) Courses which are eligible for grant or loan from the Student Finance Office (SFO) or funded by the Employees Retraining Board (ERB) but are not or have not been fully subsidised by the SFO or ERB;

 

2) Accredited by the Hong Kong Council for Accreditation of Academic and Vocational Qualifications;

 

3) Professional examinations administrated by the Hong Kong Examinations and Assessment Authority; and

 

4) Any other courses or examinations will require approval from the HKMC

For the purpose of establishing a new business or conducting an existing business which has been established for less than 5 years (counting from the date of the first business registration)

For conducting a self-employment business

 

 

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Key Product Features

Key Product Features
 Micro Business Start-up Loan*Self-employment Loan*Self-enhancement Loan
Maximum
Loan Amount
HK$300,000HK$100,000 or up to 100% of training course/examination fee (after deduction of any government/SFO or ERB subsidy), whichever is lower
Interest Rate

Not higher than 9% per annum or 8% per annum if a satisfactory third-party guarantee is provided

(Participating banks may have different interest rate calculation methods. Please read
“Costs and Other Important Information” session for more details.)

Loan Tenor

1 year, 2 years, 3 years, 4 years or 5 years

Repayment Arrangement
  • Principal repayment holiday for the first 3 months for loan tenor of 1 year
  • Principal repayment holiday for the first 6 months for loan tenor of 2 and 3 years
  • Principal repayment holiday for the first 12 months for loan tenor of 4 and 5 years

Borrowers are required to pay interest only during the principal repayment holiday

*Existing or former borrowers of Micro Business Start-up Loan or Self-employment Loan who have/had maintained their existing or former loans for at least two years and a satisfactory repayment record under the Scheme can apply for a new loan (either a Micro Business Start-up Loan or a Self-employment Loan) with a maximum loan amount of HK$600,000 (including the existing outstanding loan amount under the Scheme except Self-enhancement Loan, if any) and an interest rate not higher than 8% per annum.

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Monthly Repayment Amount

 

Monthly Repayment Table (for every HK$100,000 loan amount)

 

Loan Tenor

1 year

2 years

3 years

4 years

5 years

Principal Repayment Holiday Period

3 months

6 months

6 months

12 months

12 months

Without Guarantor

Interest Rate per annum

9.00%

Monthly instalment amount DURING Principal Repayment Holiday

$750.00

$750.00

$750.00

$750.00

$750.00

Monthly instalment amount AFTER Principal Repayment Holiday

$11,531.93

$5,959.77

$3,734.82

$3,179.97

$2,488.50

Total Interest Expense

$6,037.37

$11,775.86

$16,544.60

$23,478.92

$28,448.00

With Guarantor

Interest Rate per annum

8.00%

Monthly instalment amount DURING Principal Repayment Holiday

$666.67

$666.67

$666.67

$666.67

$666.67

Monthly instalment amount AFTER Principal Repayment Holiday

$11,484.76

$5,914.03

$3,688.83

$3,133.64

$2,441.29

Total Interest Expense

$5,362.85

$10,452.56 

$14,664.92 

$20,811.08

$25,181.96

The above table is for illustration only. Participating banks may have different interest rate calculation methods, therefore the monthly repayment amount and the total interest expense may vary amongst different banks. Applicants should make sure that they understand the interest rate calculation methods and the relevant arrangements of different participating banks before undergoing an initial screening. The terms and conditions of the loan will be subject to the Facility Letter and any relevant documents signed between applicants and the bank.

 

 

 

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Application Flow

 

Application Flow

 

Micro Business Start-up LoanSelf-employment LoanSelf-enhancement Loan

 

(for establishing a new business)

(for conducting an existing business which has been established for less than 5 years)

Pre-application

Initial Screening via NGO or bank

Entrepreneurial Training

 

 

 

Business Plan

 

Application

Formal Loan Application via NGO

Formal Loan Application via NGO or bank

Vetting Panel Interview

 

Loan Approval

Loan Drawdown

Loan Drawdown 

Follow-up by NGOs/mentors

 

 

In case the application is not successful, interested applicants may submit a new application 6 months after the issue date of "Notification of Results" of the last application which will be handled following the same application flow as specified in the above table.

 

For more details on the application flow, please visit the relevant links below:


Micro Business Start-up Loan and Self-employment Loan

Self-enhancement Loan

 

 

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Notes for Post Loan Drawdown

Notes for Post Loan Drawdown
Mentorship

Borrowers should maintain regular contact with the assigned mentor for advice on resolving problems in running businesses, if any.

Business Progress Report

Borrowers are required to submit a Business Progress Report to the relevant NGO on a regular basis to provide an update on the progress of their business after loan drawdown.

Documents Required for Incorporation

(For applications of Micro Business Start-up Loan for establishing a new business)

 

Borrowers of Micro Business Start-up Loan for establishing a new business are required to complete, within 12 months after drawdown on the loan, the relevant business registration and, if the business is to be conducted through a limited company, the incorporation of the limited company. Within three months after such business registration and, if applicable, company incorporation have been completed, and in any event within 12 months after drawdown has been made, borrowers should provide the bank with the relevant business registration certificate and search record and, if applicable, the certificate of incorporation and the company search record.

New Loan(s) Application for Existing and Former Borrowers

Existing or former borrowers of Micro Business Start-up Loan or Self-employment Loan who have/had maintained their existing or former loans for at least two years and a satisfactory repayment record under the Scheme can apply for a new loan (either a Micro Business Start-up Loan or a Self-employment Loan) with a maximum loan amount of HK$600,000 (including the existing outstanding loan amount under the Scheme except Self-enhancement Loan, if any) and an interest rate not higher than 8% per annum.

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Costs and Other Important Information

Costs and Other Important Information
Interest

Interest is charged by banks on the outstanding loan amount. Interest rate charged is not higher than 9% per annum or 8% per annum if a satisfactory third-party guarantee is provided. Please note that the participating banks may have different interest rate calculation methods, therefore the monthly repayment amount and the total interest expense may vary amongst different banks.

 

Applicants should make sure that they understand the interest rate calculation methods and the relevant arrangements of different participating banks before undergoing an initial screening. The terms and conditions of the loan will be subject to the Facility Letter and any relevant documents signed between applicants and the bank.

Credit Report

Applicants (and the guarantor, if any) are required to obtain a TransUnion Credit Report from TransUnion Limited before completing Initial Screening Form at bank/NGO. Applicants have to bear the cost of the TransUnion Credit Report. If the issue date of the TransUnion Credit Report is more than 30 days before the signing date of the Application Form, applicants will need to obtain another report from TransUnion Limited again. They may contact TransUnion Limited for more information (Tel: 2577 1816, website: www.transunion.hk).

Business Registration and Company Search

Applicants have to bear the cost of their own business registration search or company search. For details, please contact Business Registration Office and Companies Registry.

Entrepreneurial Training

Applicants for Micro Business Start-up Loan or Self-employment Loan may be required to complete an entrepreneurial training course. They will have to pay any applicable course fee.

Other Fees and Expenses

Banks and NGOs will not charge applicants any fee for a microfinance loan application or the provision of related services. However, if a guarantor is procured to support the loan application, the bank may require the guarantor to seek independent legal advice before signing any legal documents. In such case, legal costs may be incurred. Please contact the bank/NGO for more information.

Lending Bank

If applicants conduct an initial screening with a bank of their choice, generally that bank will be the bank to provide and process their loan. However, if they conduct the initial screening with an NGO, they cannot choose the bank which will make the loan to them.

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Mentor Recruitment

In addition to providing loans to borrowers, the Scheme will also provide supporting services such as entrepreneurial training and mentoring services to applicant/borrower with different needs.


The NGOs will provide entrepreneurial training to applicant/borrower to enhance their business knowledge and entrepreneurial skills. In addition, the NGOs will also offer mentoring services to entrepreneurs. Overseas experience has shown that mentors play a crucial role in the Scheme. Mentors provide advice on preparation of business plan, and also share their experience of running a business with applicants/borrowers. Such assistance and support could enhance the competitiveness of applicants/borrowers and enhance the success chance of the business plans.


We understand the importance of mentors in the Scheme, we sincerely invite experienced business entrepreneurs, business professionals or industry veterans to become mentors to promote self reliance and entrepreneurship in Hong Kong.


Please return the completed mentor application form to the HKMC either by mail, fax or email, and mark the reference “Microfinance Scheme – Mentor Application” on the envelope.


Address: 34/F, Cosco Tower (High Block), Grand Millennium Plaza, 183 Queen's Road Central, Hong Kong

 

Tel: 2536 9990
Fax: 2536 9500
E-mail: mf_mentors@hkmc.com.hk


Please refer to the following links for more details:

 

Mentor Application Form

 

Mentor Information Pack

Enquiry

 

If you have any enquiry, please contact any participating bank, NGO or the HKMC for more information.

 

Scheme Hotline: 2536 0707
Scheme Enquiry: mf_enquiry@hkmc.com.hk

 

 

 

 

Note: To borrow or not to borrow? Borrow only if you can repay!

General Information

1) List of Participating Banks
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2) List of Participating NGOs
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3) Leaflet
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4) Information Pack
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5) Initial Screening Form for Micro Business Start-up Loan and Self-employment Loan
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6) Application Form for Micro Business Start-up Loan and Self-employment Loan
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7) Initial Screening and Application Form for Self-enhancement Loan
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8) Business Plan Template
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9) List of Entrepreneurial Courses
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10) Mentor Application Form
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11) Mentor Information Pack
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12) Microfinance Scheme Statistics
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13) Tips for Successful Business Start-up (Chinese Version Only)
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14) Microfinance Study Group Report (August 2011)
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15) Application Form for Micro Business Start-up Loan and Self-employment Loan - (for the Hong Kong Food Truck Pilot Scheme)
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16) Frequently Asked Questions - (for the Hong Kong Food Truck Pilot Scheme)
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17) Other Useful Links
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