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SMEs seek easier terms for loan scheme

Updated: 2009-06-16 07:12

By George Ng(HK Edition)

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HONG KONG: Small- and medium-sized enterprises (SMEs) are calling for the government to make it easier for them to borrow under the Special Loan Guarantee Scheme (SpGS) as many still fail to benefit from the scheme.

The government launched the scheme in December last year to provide 70 percent guarantee for commercial loans granted by participating lending institutions (PLIs) to eligible SMEs as part of its relief measures aimed at helping SMEs with their liquidity problems during the global financial crisis.

However, some SME owners complained that the scheme came too late and their businesses have collapsed due to the economic downturn.

They also noted that the utilization ratio of the scheme so far is low despite the fact that many SMEs are in dire need of cash.

According to latest government data, the cumulative amount of loans approved under this scheme as of last Friday totaled HK$19 billion, just 19 percent of the HK$100 billion ceiling the government has set for its guarantees.

Out of 11,409 applications received by PLIs so far, 10,084 were approved. The government expected that 40,000 SMEs will benefit from the scheme.

"Many SMEs, mostly in the catering and retail sectors, have collapsed in recent months as they failed to secure the necessary liquidity amid worsening operating environment," said Anders Wong, general manager at International Service Access Ltd, an SME engaged in consultancy and public relations services.

The SMEs say the government needs to increase its guarantee ratio and ask participating financial institutions to be more lenient in approving applications so that more SMEs can obtain loans under the scheme.

Ho Kwong-yiu, chairman of Kwong's Art Jewellery Ltd and vice-president of Hong Kong Small & Medium Enterprises General Association (HKSMEGA), echos Wong's view, saying "we hope the government can raise its guarantee ratio further and ease the terms further so that more SMEs will benefit from it".

The utilization ratio of the scheme may rise with more SMEs likely to benefit after the Trade and Industry Department (TID) implemented the enhancement measures for the SpGS yesterday.

The government announced the enhancement measures earlier this year with the aim to make it easier for SMEs to obtain loans.

Under the enhanced SpGS, the guarantee ratio will be raised from 70 percent to 80 percent.

(HK Edition 06/16/2009 page4)

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