Guarantee Raised For Hong Kong SME Fund Schemes

by Mary Swire, Tax-News.com, Hong Kong

26 February 2008

The Small & Medium Enterprise Loan Guarantee Scheme's maximum guarantee amount will be raised from USD4m to USD6m from March 3rd, the Hong Kong Trade & Industry Department has announced.

This includes a USD5m guarantee ceiling, raised from USD2m, for business installations and equipment loans and a new working capital loan with a USD1m guarantee cap.

At the same time, the Department revealed, the SME Export Marketing Fund's maximum grant amount will be raised from USD80,000 to USD100,000, and the scope expanded to include advertisement spending for trade promotion publications. Each application's grant ceiling will remain at USD30,000.

The Legislative Council last month approved a USD500m injection into the SME Funding Schemes - USD350m will be for the export-marketing fund and the SME development fund, and USD150m for the loan guarantee scheme. Assuming a 7.5% default rate, this will raise the total government guarantee commitment from USD10.6b to USD12.6b.

The Department explained that the new measures will enhance support to SMEs, particularly those with Mainland operations, to meet the challenges arising from the Mainland's 11th 5-Year Plan, to obtain finance for upgrading, restructuring or relocating their operations, and to develop Mainland and overseas markets.

As at the end of last year, more than 10,000 SMEs had obtained finance totalling USD21b, of which more than USD9b was covered by Government guarantee; about 20,000 SMEs had received grants totalling more than USD830m; and over 100 projects involving a total grant of about USD120m had been approved.

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