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David Evans

Small and medium-sized enterprises (SMEs) have called on the Government to restructure its Special Finance Scheme, claiming the present structure cannot solve their financing problems.

 In a survey by the Federation of Hong Kong Industries, SMEs said they believed the Government had to increase the guarantee amount as well as the guarantee period before banks would treat them more leniently.

 The special loan package, launched in August, is aimed at relieving the financial strains being encountered by SMEs.

 The loans carry interest charged at prime or the Hong Kong interbank offered rate, whichever is higher, plus a spread.

  Federation deputy chairman Kenneth Ting Woo-shou said many SMEs were still facing difficulties in seeking finance from banks.

 He said that banks, when approving credits, considered only physical assets as a security, but they neglected the business prospects of companies that were borrowing.

 'More than half of the [103] respondents revealed they would or had submitted loan applications to banks or financial institutions through the scheme,' Mr Ting said.

 However, more than half of these had not received replies, while nine had been officially turned down.

 'One of the main reasons for rejection was having inadequate securities for loans,' Mr Ting said.

 The survey found that 40 per cent of the applicants believed the banks' requirement that they provide 100 per cent physical asset security too stringent.

 'We urge the Government to increase the proportion of guarantee appropriately and to lengthen the guarantee period to at least three years,' Mr Ting said.



Lobbyists claim loan criteria for special finance too stringent