Hong Kong Mortgage Corporation

Cash for start-ups in loans scheme

PUBLISHED : Saturday, 30 June, 2012, 12:00am
UPDATED : Saturday, 30 June, 2012, 12:00am

The Hong Kong Mortgage Corporation launched a microfinance programme yesterday, aimed at helping the cash-strapped - from start-ups to self-employed.

The agency, which aims to promote wider home ownership and develop the local debt market, said it was working with six banks and five non-governmental organisations to promote the plan.

The scheme offers micro business start-up loans, self-employment loans and self-enhancement loans.

Financial Secretary John Tsang Chun-wah said one key difference between the microfinance scheme and traditional loans was its additional services to clients - including mentorship, entrepreneurial training and support from non-government organisations.

'Although the size of the loans is somewhat modest, they can still provide a good measure of assistance to borrowers,' said Tsang.

The total loan amount is capped at HK$100 million. Any individual aged 18 or above with a Hong Kong identity card or a one-way permit can apply for a loan under the pilot scheme, which will run for three years.

The micro business start-up loan will be capped at HK$300,000 for individuals. Self-employment loans will stop at HK$200,000 and self-enhancement loans at HK$100,000 - or up to 100 per cent of the training course or examination fee, depending on which is lower.

Interest rates will be offered at a maximum of 9 per cent per annum, or 8 per cent if a satisfactory third-party guarantee is provided.

Applicants can apply for two kinds of loans under the scheme at the same time, provided that one is a self-enhancement loan.

Last year the HKMC introduced the SME Financing Guarantee Scheme, which had 286 applicants by late April. The Reverse Mortgage Programme was launched in July last year to help retirees. It had 225 applicants by late April.

The agency purchased HK$9.7 billion of loans in the city last year. Some HK$26.3 billion of new loans were drawn under the Mortgage Insurance Programme.

Up to 97 per cent of these loans were used for property in the secondary market.

The HKMC, which issued HK$28.5 billion of debt last year, was the most active issuer of corporate debt in the Hong Kong dollar market since 2001.

The agency issued its first yuan bond in Hong Kong last year, raising 600 million yuan (HK$736.61 million).

HKMC officials said the agency would continue to seek prudent pre-funding from local and overseas debt markets to support loan purchases and refinancing.