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SME Financing Guarantee Scheme

Helps You Grasp Business Opportunities and Expand Your Business

The SME Financing Guarantee Scheme (“Scheme”) was launched on 1 January 2011 by The Hong Kong Mortgage Corporation Limited (“HKMC”). Since 1 May 2018, the Scheme business has been transferred to and carried on by HKMC Insurance Limited (“HKMCI”), a wholly-owned subsidiary of the HKMC.

 

 

Objective and Guarantee Coverage

The Scheme aims at helping local small and medium-sized enterprises (“SMEs”) and non-listed enterprises to obtain financing from participating lenders for meeting their business needs so as to enhance their productivity and competitiveness in the rapidly changing business environment. Under the Scheme, the HKMCI may provide guarantee coverage of 50%, 60% or 70% to the credit facilities of eligible enterprises approved by participating lenders.

 

 

Award

Honoured with the Best SME’s Partner Award by The Hong Kong General Chamber of Small and Medium Business for eight consecutive years since 2012.

 

2019 SME Partner Award

 

 

Special Concessionary Measures

To help tide SMEs over financing difficulties as a result of a possible credit crunch in midst of the uncertain global economic environment, the Financial Secretary announced in the 2012-13 Budget Speech a series of measures to support the SMEs, including the introduction of the time-limited Special Concessionary Measures under the Scheme which provides 80% guarantee coverage (“80% Guarantee Product”) to credit facilities of eligible enterprises approved by participating lenders at concessionary guarantee fee rates.

 

The 80% Guarantee Product has provided strong support for SMEs in obtaining financing in the commercial lending market since its launch on 31 May 2012 and benefited an increasing number of enterprises. As announced in 2016-17 Budget Speech, qualifying guarantees under the 80% Guarantee Product can enjoy 10% off on annual guarantee fee rates and are no longer subject to a minimum annual guarantee fee rate of 0.5% (“Guarantee Fee Concessions”) (Note 1).

 

Note 1: The Guarantee Fee Concessions are applicable only to guarantee fees on qualifying guarantees due and payable on or after 1 June 2016.

 

To further alleviate the financing burden of the local enterprises and assist enterprises to obtain financing from lenders, the Government implemented enhancements for qualifying guarantees under the 80% Guarantee Product (“Enhancement Measures”) since 19 November 2018, including reducing the guarantee fee rates by 50% (“Further Concessions in Guarantee Fee”), increasing the maximum facility amount from HK$12 million to HK$15 million and lengthening the maximum guarantee period from five years to seven years. The Financial Secretary announced in August 2019 the further extension of the application period and the three Enhancement Measures under the 80% Guarantee Product to end-June 2022.

 

 

90% Guarantee Coverage under the Scheme (“90% Guarantee Product”)

With the approval of the funding by the Finance Committee of the Legislative Council on 6 December 2019, the 90% Guarantee Product under the SFGS has been introduced on 16 December 2019. The 90% Guarantee Product aims at providing additional support to smaller-sized enterprises, businesses with relatively less operating experience, as well as professionals seeking to set up their own practices, to obtain financing. The application period will last until end-June 2022. Guarantee Fee Concessions and Further Concessions in Guarantee Fee apply to the 90% Guarantee Product as well.

 

The terms applicable to the 90% Guarantee Product are similar to those for the 80% Guarantee Product except for the items below:

Business Operation History

There is no requirement on business operation history.

Eligible Type of Loans

Term loan only

Maximum Facility Amount

HK$ 6 million

Maximum Guarantee Period

Five years

Maximum Interest Rate

The 90% Guarantee Product requires the overall interest rates of the guaranteed facilities not exceeding specified interest rate ceilings tiered based on the borrower’s business operation history (Note 2).

Annual Guarantee Fee Rates

On qualifying guarantees ­under the 90% Guarantee Product under Further Concessions in Guarantee Fees:

 

• For borrowers with business operation history more than three years: Up to 0.36% of the loan amount (not subject to a minimum annual guarantee fee rate of 0.5%)

 

• For borrowers with business operation history of three years or less: Up to 0.45% of the loan amount (not subject to a minimum annual guarantee fee rate of 0.5%)

 Note 2: Specified interest rate ceiling(s) as at 16 December 2019:

• 8% per annum for borrowers with business operation history more than 3 years for 90% Guarantee Product.

• 10% per annum for borrowers with business operation history of three years or less for 90% Guarantee Product.

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Eligibility

Eligible enterprises must have business operations in Hong Kong and be registered in Hong Kong under the Business Registration Ordinance (Chapter 310). They must also have been in operation for at least one year as at the date of guarantee application, and have good loan repayment records. Listed companies, lending institutions and affiliates of lending institutions are not eligible for the Scheme.

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Type and Use of Loans

The Scheme guarantees both term loan and revolving credit facilities. An eligible 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 (such as industrial or commercial properties, machinery and equipment, but excluding residential properties) in relation to the enterprises’ business or refinancing any facilities with a guarantee issued under the Scheme.

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Maximum Facility Amount, Maximum Guarantee Period and Maximum Interest Rate

Each eligible enterprise and its related entity(ies) can obtain guarantee(s) in respect of credit facility(ies) not exceeding HK$12 million in total at any one time under the Scheme under normal circumstances. The maximum guarantee period is five years. Under the Enhancement Measures, qualifying guarantees under the 80% Guarantee Product may cover the maximum facility amount and the maximum guarantee period of HK$15 million and seven years respectively (Note 3).

 

However, with respect to any application for the 80% Guarantee Product, the HKMCI may in its sole and absolute discretion to determine that an eligible enterprise and any of its related entity(ies) may be entitled to separate maximum facility amounts. Enterprises may approach the participating lenders for details of the arrangement.

 

The Scheme requires the overall interest rate of the guaranteed facility not exceeding a specified interest rate ceiling (Note 4). The HKMCI will also consider applications with overall interest rate exceeding such ceiling on a case-by-case basis and, if such overall interest rate is accepted, the annual guarantee fee rate will be adjusted accordingly and the ranges specified under Annual Guarantee Fee Rates will not apply. The HKMCI will adjust and announce the relevant ceiling to the overall interest rate in accordance with the interest rate cycle. Enterprises should consult their lenders as the overall interest rate level applicable to each facility is decided by the participating lenders.

 

Note 3: Applicable to applications for the 80% Guarantee Product submitted during 19 November 2018 to end-June 2022.

Note 4: Specified interest rate ceiling as at 16 December 2019:

• 8% per annum for borrowers with business operation history more than 3 years for 90% Guarantee Product.

• 10% per annum for borrowers with business operation history of three years or less for 90% Guarantee Product.

• 10% per annum for 80% Guarantee Product and other guarantee products.

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Annual Guarantee Fee Rates

For each credit facility with an overall interest rate not exceeding the specified interest rate ceiling (Note 5), the annual guarantee fee rate is as follows:

 

Under the 50%, 60% or 70% guarantee products:

• Ranges from 0.5% to 3.2% of the loan amount/ limit of the facility

 

Under the 80% Guarantee Product:

• For any guarantee fee due and payable before 1 June 2016: Ranges from 0.5% to 1.0% of the loan amount/limit of the facility

• For any guarantee fee on qualifying guarantees under the 80% Guarantee Product due and payable on or after 1 June 2016 under the Guarantee Fee Concessions: Up to 0.9% of the loan amount/limit of the facility (not subject to a minimum annual guarantee fee rate of 0.5%)

• For any guarantee fee on qualifying guarantees under the 80% Guarantee Product due and payable on or after 19 November 2018 under Further Concessions in Guarantee Fee: Up to 0.45% of the loan amount/limit of the facility (not subject to a minimum annual guarantee fee rate of 0.5%)

 

Enterprises can pay the guarantee fee by annual payments or, for term loans, by an upfront lump-sum payment. Any upfront lump-sum guarantee fee payment can be financed by utilising the relevant facility. Enterprises can consult their lenders for details or get an idea of the amount involved by making use of the Scheme’s guarantee fee calculator for reference.

 

Note 5: Specified interest rate ceiling as at 16 December 2019:

• 8% per annum for borrowers with business operation history more than 3 years for 90% Guarantee Product.

• 10% per annum for borrowers with business operation history of three years or less for 90% Guarantee Product.

• 10% per annum for 80% Guarantee Product and other guarantee products.

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Application Procedure

 Enterprise should contact the participating lenders to apply for the loan or credit facility. The participating lenders will review the application before submitting the guarantee application form and relevant supporting documents to the HKMCI for review and approval.

A list of the participating lenders is available here.

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Publicity Video

The publicity video is available here.

Enquiry

2For general enquiries about the Scheme, please contact:
1. the participating lenders; or
2. the HKMCI

 

Scheme Hotline: 2536 0392

Scheme Enquiry: sfgs_enquiry@hkmci.hk

 

 

Remarks

This Scheme is operated by the HKMCI. The copyright to the contents of this webpage is owned by the HKMCI.

 

 

Last Update Date: 24 January 2020

General Information

1) List of Participating Lenders
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2) Leaflet
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3) Success Stories
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4) Product Factsheet
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5) Application Procedures
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6) List of Application Documents
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7) SME Financing Guarantee Fee Calculator
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8) SME Financing Guarantee Scheme (80% and 90% Guarantee Products) Statistics
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9) Application Procedures for an Authorized Institution to become a Participating Lender
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