While they hope for interest-rate relief from a United States Federal Reserve Board meeting later this month, small and medium-sized enterprises (SME) affected by the Sars outbreak can begin tapping into a HK$3.5 billion publicly funded loan scheme on Monday. SMEs in the entertainment, hotel, restaurant, retail and travel industries will be able to submit loan applications to cover staff wages. The scheme is designed to help Sars-hit businesses stay afloat and comes after ratings agencies warned earlier this week that the crisis could affect Hong Kong banks' asset quality. Speaking after yesterday's biweekly Hong Kong Association of Banks (HKAB) meeting, association chairman Raymond Or Ching-fai said the chances of a Fed rate cut were slim but admitted interest rates could go down a further 0.25 to 0.5 percentage point. Mr Or also defended the lending scheme's requirement that shareholders representing at least 90 per cent of a company's equity guarantee the loans. 'We realise that some minority shareholders may not want to guarantee the loans or some may not be in Hong Kong,' Mr Or said. 'But this is the taxpayer's money and we must strike a balance.' Hong Kong Monetary Authority (HKMA) deputy chief executive David Carse urged banks to adopt a consistent approach in dealing with customers affected by Sars. 'The HKMA believes that it will be in the best long-term interests of the economy, the banking industry and its customers if financial institutions adopted a supportive attitude towards customers experiencing financial stress as a result of the Sars outbreak,' Mr Carse wrote in a circular issued to all financial institutions in Hong Kong. To qualify for the lending scheme, applicants must submit documents including their business registration certificate, company annual returns and copies of the identity cards of shareholders acting as guarantors. Applicants must also have banked with the lender for at least six months and not have any bank loans overdue for more than 30 days on the day of the application.