90% credit guarantee or 12% interest SMEs are hard to get life-saving money 

In recent months, Hong Kong’s economy has weakened

The government has launched three rounds of revitalization measures. Among them, the SMEs’ 90% credit guarantee products launched in early September (that is, the government guarantees 90% of the loans to banks), the newspaper checked the Legislative Council documents and found that the proposed interest rate is as high as 12%, the level of interest is no different from that of the money. Some people in the banking sector also said that the SME loans were very slow due to various reasons. As a result, SMEs may not be able to obtain “life-saving money". In addition, the repayment pressure is high and the actual effect of the plan is doubtful. Reporter: Li Haicheng

The newspaper checked the documents submitted to the Legislative Council Panel on Commerce and Industry at the end of last month and found that the loan interest rate of the proposed 90% credit guarantee products was extremely high

It was based on three years of operational experience and had the highest operating experience of three years or more. The loan interest rates were 8% and 12% respectively, and the loan interest rate of new ventures also reached 12%. Moreover, the form of credit is different from the previous SME Financing Guarantee Scheme products. There is no revolving loan and only the option of term loan is available.

No revolving loan

Some corporate banking circles bluntly said that although the risk of SME financing guarantee schemes is not too high, banks have low interest in undertaking the above loans because the amount of each loan is not large. In addition to the bank’s approval, it also needs to be approved by the Hong Kong Mortgage Corporation Limited. The procedures are more complicated and the review time is longer. It takes about one to two months. Therefore, some applicants will withdraw their applications. He also pointed out that “the guarantee period is five years, and the revolving loan option may require monthly repayment of the loan. The repayment pressure is fine." It is expected that some applicants may instead use other similar and lower interest rate methods. If the property mortgage financing is added, the number of approvals and the amount will not be much.

Some industries also think that the plan is not attractive. The convener of the Hong Kong Environmental Hygiene Industry Association, Mr. Rui Rui, pointed out that “the industry has more procedures and approvals, and fewer customers may find the number after three or four months, plus competition and profit." High, it is difficult to bear high interest rates." She said that for SMEs, the most important thing is stable cash flow, especially in the current situation, the funds are tight, so high interest rates and fixed loans are not attractive.

The 90% credit guarantee products launched by the Government are aimed at prospective entrepreneurs, companies with less operational experience and professionals who are interested in setting up individual practice companies. The maximum loan amount is $6 million. The secured company is not required to have one year of operating experience and is not required to pay a full financial report. It can be replaced by other financial certificates. According to the insurance company, it is working with the government to study the content and implementation details of the plan.

In addition, according to the documents submitted by the HKMA to the Legislative Council, between May 31, 2012 and September 20, 2019, the number of approved loans and loans to SMEs from the Government was 16,647 and $6.9 billion respectively. According to this calculation, from September 20 to October 18, about one month, the number of approvals was 169, the amount was 1 billion yuan, and each amount involved about 5.91 million yuan.


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