Relief for Loan Guarantee Scheme borrowers

PUBLISHED : Friday, 13 June, 2003, 12:00am
UPDATED : Friday, 13 June, 2003, 12:00am

Updated at 6.50pm:
The Government announced on Friday it would relax requirements for the Loan Guarantee Scheme from June 16 due to the severe Acute Respiratory Syndrome (Sars) outbreak.

A Government spokesman said the relaxation would apply to businesses in all sectors under the scheme including restaurants, hotels, retail stores, travel agents, cinema and karaoke establishments.

When the scheme was first introduced, several guarantees for the full amount of the loan were required from shareholders holding a total of 90 per cent or more equity interest in the business - if there was more than one shareholder. The loans could only be used for payment of staff salaries.

'After the relaxation, the [guarantees requirement] from shareholders will be reduced to 70 per cent,' the spokesman said.

He added that applicants could also use any remaining funds, after direct payment of staff salaries, to meet other operating expenses. Originally the loans can only be used for paying employees' salaries.

The Government has earmarked $3.5 billion for the scheme along with an $11.8 rescue package to cushion the economic impact of Sars.