HK loan schemes that have paid out HK$170 billion during Covid-19 pandemic to be extended 6 months, Carrie Lam says

22-Sep-2021 Intellasia | South China Morning Post | 7:07 AM Print This Post

Three government-backed borrowing schemes will be extended by six months in a bid to ease the economic difficulties that individuals and companies continue to face during the Covid-19 pandemic, Hong Kong’s leader has revealed.

Chief Executive Carrie Lam Cheng Yuet-ngor on Tuesday said the three funds were the Special 100 percent Loan Guarantee scheme, the SME financing guarantee scheme and the preapproved principal payment holiday scheme.

“Some industries are still suffering, especially in terms of cash flow, even though there have been signs of economic recovery,” Lam said at a press briefing before her weekly cabinet meeting. “Borrowers of these three schemes will have relief, because the schemes will be extended for six months.”

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The schemes created to help Hong Kong businesses reeling from the economic havoc unleashed by the pandemic have so far granted a total of HK$170 billion (US$21.8 billion) in loans to 67,000 applicants, including 41,600 companies that employ 610,000 people.

The SME financing guarantee scheme, managed by the Hong Kong Mortgage Corporation, was first introduced in 2012, then expanded as a pandemic-relief measure. It offers three loan products in which 80, 90 or 100 per cent of the funds are guaranteed by the government.

“This means companies will be only required to repay interest, not principal, for up to 24 months,” Lam said.

The mortgage corporation said the application for the 100 per cent loan guarantee product, which was introduced in April last year, would be extended to the end of June next year, with details to be announced in about two weeks.

The preapproved principal payment holiday scheme for companies introduced in May last year and administered through banks will be extended until April. It was previously extended in November last year and May 2021.

The other measure being stretched through to April is the Special 100 percent Loan Guarantee scheme introduced by Financial Secretary Paul Chan Mo-po earlier this year in his annual budget address.

The plan allows permanent residents without jobs to borrow up to HK$80,000 (US$10,270), or six times the average monthly income, at an annualised 1 per cent interest rate. The repayment period is six years.

According to Hong Kong Monetary Authority statistics, more than 30,000 applications for the personal loan scheme, involving HK$2.1 billion, had been approved as of September 10.

The loans averaged HK$69,000 each, while more than 80 per cent of the approved applications were allowed to pay the interest first and the principal later.

“While the unemployment rate in Hong Kong has eased recently, business conditions remain difficult for a number of sectors, and some residents are still facing hardship,” Chan said. “By extending the application period of the [personal loan scheme], we can provide support to more unemployed people who are in need, helping to tide them over during the interim difficulties.”

Danny Lau Tat-pong, honorary chair of the Hong Kong Small and Medium Enterprises Association, said the extension of the schemes would be helpful to smaller businesses.

“It is good for those which don’t have sufficient liquidity,” he said. “There are still many sectors such as tourism and higher-end retail that are struggling.”

Tourism, a pillar of the economy, has ground to a halt after borders were closed. Freddy Yip Hing-nin, president of the Hong Kong Travel Agent Owners Association, said industry stakeholders such as travel agents and coach drivers had no income, while hotels and airlines were struggling to stay afloat.

“We have lobbied the government for the extension because many companies don’t have income and had to borrow money to repay interest,” he said.


Category: Hong Kong

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