Banks should be required to allocate a certain percentage of loans to small and medium-sized businesses, it was suggested yesterday. The chairman of the Hong Kong Chamber of Small and Medium Business, Daniel Poon Sik-chuen, said such a rule was the case in the Philippines. In the United States, the Government had to award a certain percentage of its tenders to such businesses. These were some of the initiatives that should be considered in Hong Kong, he said. While Mr Poon applauded the $2.5 billion credit guarantee scheme announced earlier this year, he doubted it would benefit many firms. Under the scheme, any company registered in Hong Kong can apply for a government guarantee for 50 per cent, or up to $2 million, of a loan, whichever is less. Mr Poon said banks would continue to pick and choose and smaller businesses would most likely lose out to big corporations. Liberal Party chairman Allen Lee Peng-fei said $2.5 billion was not enough to help out such businesses. The economy would worsen in the third and fourth quarters and unemployment would continue to rise.