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Dennis Eng

The government will guarantee up to 70 per cent of bank loans to small and medium-sized enterprises to help boost investment and job creation.
Many of them are still trying to rebuild their finances after the global economic downturn.
The move is a vote of confidence, especially for banks which find lending to such businesses lucrative but full of risk.
Impending legislation for a minimum hourly wage of HK$28 from next year is also expected to put pressure on the SMEs.  
Financial Secretary John Tsang Chun-wah  said the SME Financing Guarantee Scheme,  which starts on January 1, would provide 'a sustainable and flexible financing platform' for the enterprises. 
A Special Loan Guarantee Scheme  brought in to help SMEs weather the financial crisis is set to expire at the end of this year. 
'By supporting banks to lend to SMEs, the SME Financing Guarantee Scheme will further enhance the stability of the banking system and complement the SME Loan Guarantee Scheme of the Trade and Industry Department, producing even greater benefits for Hong Kong,' Tsang said.
Under the existing loan guarantee scheme, the government guarantees loan repayments by SMEs to lenders. 
There are more than 280,000 SMEs in Hong Kong, employing more than 1.2 million people.
Under the new SME Financing Guarantee Scheme, the Mortgage Corporation  will guarantee between 50 per cent and 70 per cent of bank loans for up to five years to qualified SMEs. 
The maximum loan amount per enterprise is HK$12 million. The minimum annual guarantee fee is 0.5 per cent of the loan amount.
The covered loans are to be used for general working capital for the business operations of small and medium-sized enterprises or to acquire equipment and assets related to their business.



Up to 70pc of loans guaranteed for  small and medium-sized enterprises