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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 (collectively, "Enterprises") to obtain financing from participating lenders ("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 the 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 the Enterprises 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 Enterprises, 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 the Lenders at concessionary guarantee fee rates.

 

The 80% Guarantee Product has provided strong support for the Enterprises 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 Enterprises and assist them to obtain financing from the 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.

 

On 8 April 2020, with the rapid deterioration of the business environment following the outbreak and spread of the COVID-19, the Government announced further enhancements on the 80% and the 90% Guarantee Products to provide the enterprises with the much needed financial support to ease their cash flow problem (“Further Enhancement Measures”). The Finance Committee of the Legislative Council approved funding of the Further Enhancement Measures on 18 April 2020.

 

The following Further Enhancement Measures in respect of the 80% Guarantee Product take effect on 29 May 2020:-

 

(i) for guarantee applications received by the HKMCI on or before 31 May 2021, the maximum facility amount per Enterprise is increased from HK$15 million to HK$18 million;

 

(ii) for guarantee applications received by the HKMCI on or before 31 May 2021, eligibility criteria is relaxed to cover listed companies in Hong Kong subject to personal guarantee by individual shareholder(s) directly or indirectly holding more than 50% of the equity interest of the listed companies; and

 

(iii) to provide interest subsidy for the Facility under 80% Guarantee Product so as to align its annual interest rate to that of the Facility under Special 100% Loan Guarantee (currently at 2.75% Note). The annual interest subsidy rate is the Facility’s annual interest rate minus 2.75% Note, subject to a cap of 3%. Each eligible Facility is entitled to interest subsidy for 12 months at maximum in a one-year subsidy period. Interest subsidy for 3 months at maximum relating to eligible Facilities with outstanding principal amount or available for drawdown (for revolving facilities) as at 30 April 2020 is to be distributed progressively starting from June 2020. Subsequent interest subsidy will be provided monthly. Interest subsidy is applicable to qualifying guarantee applications received by the HKMCI on or before 31 May 2021 which are subsequently approved. All interest subsidies will be automatically credited to the Borrower’s account by the Lender. Applications for interest subsidy are not required so as to speed up the process.

 

 Note: 2.75% is calculated at the Prime Rate of the HKMC (5.25% as at 29 May 2020, subject to adjustment from time to time) minus 2.5% and is subject to adjustment due to change of the Prime Rate of the HKMC.

 

Remarks: Any overdue interest penalty, late or penalty charges, penalty payment or administrative fee imposed on overdue payments or repayments will not be subsidized. If a Facility eligible for interest subsidy is refinanced by a new Facility on or before 31 May 2021 under the Scheme, such new Facility is only eligible for interest subsidy in the remaining month(s) of the one-year subsidy period.

 

 

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 the 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.

 

On 8 April 2020, with the rapid deterioration of the business environment following the outbreak and spread of the COVID-19, the Government has announced Further Enhancement Measures. The Finance Committee of the Legislative Council approved funding of the Further Enhancement Measures on 18 April 2020.

 

The following Further Enhancement Measures in respect of the 90% Guarantee Product take effect on 29 May 2020:-

 

(i) for guarantee applications received by the HKMCI on or before 31 May 2021, the maximum facility amount per Enterprise is increased from HK$6 million to HK$8 million;

 

(ii) for guarantee applications received by the HKMCI on or before 31 May 2021, eligibility criteria is relaxed to cover listed companies in Hong Kong subject to personal guarantee by individual shareholder(s) directly or indirectly holding more than 50% of the equity interest of the listed companies; and

 

(iii) to provide interest subsidy for the Facility under 90% Guarantee Product so as to align its annual interest rate to that of the Facility under Special 100% Loan Guarantee (currently at 2.75% Note). The annual interest subsidy rate is the Facility’s annual interest rate minus 2.75% Note, subject to a cap of 3%. Each eligible Facility is entitled to interest subsidy for 12 months at maximum in a one-year subsidy period. Interest subsidy for 3 months at maximum relating to eligible Facilities with outstanding principal amount as at 30 April 2020 is to be distributed progressively starting from June 2020. Subsequent interest subsidy will be provided monthly. Interest subsidy is applicable to qualifying guarantee applications received by the HKMCI on or before 31 May 2021 which are subsequently approved. All interest subsidies will be automatically credited to the Borrower’s account by the Lender. Applications for interest subsidy are not required so as to speed up the process.

 

Note: 2.75% is calculated at the Prime Rate of the HKMC (5.25% as at 29 May 2020, subject to adjustment from time to time) minus 2.5% and is subject to adjustment due to change of the Prime Rate of the HKMC.

 

Remarks: Any overdue interest penalty, late or penalty charges, penalty payment or administrative fee imposed on overdue payments or repayments will not be subsidized. If a Facility eligible for interest subsidy is refinanced by a new Facility on or before 31 May 2021 under the Scheme, such new Facility is only eligible for interest subsidy in the remaining month(s) of the one-year subsidy period.

 

 

Special 100% Loan Guarantee under the Scheme

The Special 100% Loan Guarantee under the Scheme started to receive application on 20 April 2020. The Special 100% Loan Guarantee aims at alleviating the burden of paying employee wages and rents by the Enterprises which are suffering from reduced income to help minimising enterprise shutting down and layoffs.

 

The application period will last until 19 April 2021.

 

 

Summary of the Key Features of Guarantee Products under the Scheme (Note 2)

Note 2: The summary covers the 80% and 90% Guarantee Products, and the Special 100% Loan Guarantee for reference only. Please refer to the SME Financing Guarantee Scheme Factsheet for detailed features of all guarantee products under the Scheme.

 

 

80% Guarantee Product

90% Guarantee Product

Special 100% Loan Guarantee

Eligibility of Borrower

Eligible enterprises must have business operation in Hong Kong and be registered in Hong Kong under the Business Registration Ordinance (Chapter 310) and have good loan repayment records. Lending institutions and affiliates of the Lenders are not eligible for the Scheme.

 

For guarantee applications received by the HKMCI on or before 31 May 2021, the eligibility criteria is relaxed to cover listed companies in Hong Kong subject to personal guarantee by individual shareholder(s) directly or indirectly holding more than 50% of the equity interest of the listed companies.

Eligible enterprises must have business operation in Hong Kong and be registered in Hong Kong under the Business Registration Ordinance (Chapter 310). Listed companies, lending institutions and affiliates of the Lenders are not eligible for the Scheme.

Business Operation History

Eligible enterprises must have business operation in Hong Kong for at least one year on the date of guarantee application.

Not applicable.

Eligible enterprises must have business operation for at least three months in Hong Kong as at December 2019.

 

In addition, eligible enterprises are required to provide proofs that they have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019.

Guarantee Coverage

80%

90%

100%

Maximum Guarantee Period

Five years under normal circumstances.

Under the Enhancement Measures rolled out in November 2018, seven years for applications received by the HKMCI by end-June 2022.

Five years

Three years

Maximum Facility Amount Per Borrower at Any Point of Time

HK$18 million, including credit facilities guaranteed under 80% and 90% Guarantee Products

(for each eligible enterprise and its Subsidiaries and its Related Entity(ies)).

HK$8 million, including credit facilities guaranteed under 80% and 90% Guarantee Products

(for each eligible enterprise and its Subsidiaries and its Related Entity(ies)).

Total amount of (a) wages and (b) rents for six months, or HK$4 million, whichever is the lower. (Note 3)

 

Note 3: For eligible enterprises without (a) and (b), proxy is made to 50% of the highest monthly net income in 2019 multiplied by six.

 

An enterprise is eligible for the Special 100% Loan Guarantee up to HK$4,000,000 regardless of the existing credit facilities of the eligible enterprise, its Subsidiaries and/or its Related Entities (whether with the same business nature or otherwise) guaranteed under the 80% and 90% Guarantee Products, if any.

 

Multiple applications under the Special 100% Loan Guarantee from the same enterprise shall be submitted to the same Lender.

 

Reuse of guarantee amount after repayment of credit facilities does not apply to the Special 100% Loan Guarantee.

 

Type of loans

Term loans and revolving credit facilities without any restriction on the proportion between the two. An eligible enterprise can borrow a term loan and a revolving credit facility at the same time.

Term loans only.

Term loans only.

Use of Credit Facilities

The credit facility must be used for (1) providing general working capital for the enterprise’s business operations, or acquisition of equipment or assets (such as industrial or commercial properties, machinery and equipment but excluding residential properties) in relation to the enterprise’s business, (2) refinancing of credit facilities guaranteed under the Scheme or (3) financing the single upfront guarantee fee for the guarantee products under the Scheme.

 

The credit facility must not be used for repaying, restructuring or repackaging all or any part of any loan, credit facility or payment obligation of the borrower, its Subsidaries and its Related Entities.

The credit facility must be used to pay wages and rents. In addition, it can be used to meet imminent needs in working capital.

 

The credit facility must not be used for repaying, restructuring or repackaging all or any part of any loan, credit facility or payment obligation of the borrower, its Subsidaries and its Related Entities, including any credit facilities granted to the borrower by the same Lender guaranteed under the Scheme.

Overall Interest Rate

10%* per annum at maximum.

Enterprises should consult the Lenders as the overall interest rate level applicable to each facility is decided by the Lenders.

8% *per annum at maximum for eligible enterprises with operating history of more than three years.

10%* per annum at maximum for eligible enterprises with operating history of three years or less.

 

Enterprises should consult the Lenders as the overall interest rate level applicable to each facility is decided by the Lenders.

Annual interest rate at 2.5% below the prime lending rate for Hong Kong Dollars ("Prime Rate").

 

Upon application, the Lenders will base on the Prime Rate of the HKMC (5.25% as at 29 May 2020, subject to adjustment from time to time) to calculate the annual interest rate (2.75% as at 29 May 2020, subject to adjustment due to change of the Prime Rate of the HKMC from time to time). Thereafter, the annual interest rates may be adjusted in accordance with the change of the Prime Rate of the Lenders.

 

The Further Enhancement Measures which take effect on 29 May 2020 provide interest subsidy for the Facility so as to align its annual interest rate to that of the Facility under Special 100% Loan Guarantee (currently at 2.75%**). The annual interest subsidy rate is the Facility’s annual interest rate minus 2.75%**, subject to a cap of 3%. Each eligible Facility is entitled to interest subsidy for 12 months at maximum in a one-year subsidy period.

 

*as at 29 May 2020

 

** 2.75% is calculated at the Prime Rate of the HKMC (5.25% as at 29 May 2020, subject to adjustment from time to time) minus 2.5% and is subject to adjustment due to change of the Prime Rate of the HKMC.

 

Annual Guarantee Fee

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.

• For eligible enterprises with business operation history more than three years: Up to 0.36% of the loan amount.

 

• For eligible enterprises with business operation history of three years or less: Up to 0.45% of the loan amount.

Not applicable.

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Application Procedure

 Enterprise should contact the Lenders to apply for the loan or credit facility. The 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 Lenders is available here.

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Publicity Video

The publicity video is available here.

Enquiry

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

 

Scheme Hotline: 2536 0392

Scheme Enquiry: sfgs_enquiry@hkmci.hk

 

 

Remarks

This Scheme is operated by the HKMCI and is subject to the relevant terms and conditions. The copyright to the contents of this document is owned by the HKMCI.

 

 

Last Update Date: 19 June 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%, 90% Guarantee Products and Special 100% Loan Guarantee) Statistics
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9) Application Procedures for an Authorized Institution to become a Participating Lender
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