SME Financing Guarantee Scheme
Helps You Grasp Business Opportunities and Expand Your Business
The Hong Kong Mortgage Corporation Limited (HKMC) launched the SME Financing Guarantee Scheme (Scheme) on 1 January 2011. The Scheme aims to help small and medium-sized enterprises (SMEs) and non-listed enterprises obtain financing from participating lenders for meeting their working capital and business needs so as to enhance their productivity and competitiveness in the rapidly changing business environment. Under the Scheme, the HKMC may provide guarantee coverage of 50%, 60% or 70% to the approved facilities of eligible enterprises.
The HKMC was honored the Best SME’s Partner Award granted by The Hong Kong General Chamber of Small and Medium Business for five consecutive years since 2012.
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 eligible facilities 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 an increasing number of enterprises have benefited from the Special Concessionary Measures. To take timely and appropriate measures to stimulate the economy, support local enterprises and safeguard employment, the Financial Secretary announced in the 2017-18 Budget Speech the further extension of the application period for the 80% Guarantee Product for another year until 28 February 2018.
The Financial Secretary announced in the 2016-17 Budget Speech the reduction of the annual guarantee fee rates for the 80% Guarantee Product by 10% and the removal of the minimum annual guarantee fee rate of 0.5%. These guarantee fee concessions are applicable to any guarantee fees due and payable on qualifying 80% guarantees on or after the commencement date on 1 June 2016. Enterprises can consult their lenders for details of the eligibility criteria.
SME Financing Guarantee Scheme TV Commercial
Source: Information Services Department, Hong Kong SAR Government
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 on 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.
Type and Use of Loans
The Scheme guarantees both term loan and revolving credit facilities. 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 (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 or under the Special Loan Guarantee Scheme operated by the Trade and Industry Department.
Maximum Loan Amount, Maximum Loan Tenor and Maximum Interest Rate
Each enterprise and its related entity(ies) can obtain guarantee(s) in respect of facility(ies) not exceeding HK$12 million in total at any one time under the Scheme under normal circumstances. The maximum loan tenor is five years.
However, with respect to any application for the 80% Guarantee Product, the HKMC may at in its sole and absolute discretion 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 exceed a specified interest rate ceiling but the HKMC will also consider applications with overall interest rate exceeding such ceiling on a case-by-case basis. The HKMC 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 lenders.
For guarantees covering any facility with an overall interest rate not exceeding the annual interest rate ceiling of 10%, the annual guarantee fee rates for the 50%, 60% or 70% guarantee products range from 0.5% to 3.2% of the loan amount / limit of the facility. Under the 80% Guarantee Product, the annual guarantee fee rates for any guarantee fees due and payable before 1 June 2016 range from 0.5% to 1.0% of the loan amount/limit of the facility.
The Financial Secretary announced in the 2016-17 Budget Speech the reduction of the annual guarantee fee rates for the 80% Guarantee Product by 10% and the removal of the minimum annual guarantee fee rate of 0.5%. These guarantee fee concessions are applicable to any guarantee fees due and payable on qualifying 80% guarantees on or after the commencement date on 1 June 2016.
Enterprises can pay the guarantee fee by annual payments or, for term loans, pay in one lump-sum upfront or by annual payments. Such lump-sum guarantee fee paid upfront may be financed by the relevant facility. Enterprises can consult their lenders for details or make use of the Scheme’s guarantee fee calculator.
Enterprise should contact the participating lenders to apply for the loan. The participating lenders will submit the guarantee application form and relevant supporting documents to the HKMC for its review and approval.
A list of the participating lenders is available here.
For general enquiries about the Scheme, please contact:
1. the participating lenders; or
2. the HKMC
Scheme Hotline: 2536 0392
Scheme Enquiry: email@example.com