Struggling small enterprises want the government to guarantee more loans, and banks to impose lower interest rates amid growing fears of more failed businesses after the Lunar New Year, the SMEs Survival Alliance says. Warning of a difficult year ahead for small and medium-sized enterprises (SMEs), alliance representative Danny Chan Yung-chin called on the administration to offer loan guarantees of 90 per cent for such businesses, up from the current 70 per cent. He said some banks may consider shouldering the remaining 30 per cent as being too risky to resume lending to SMEs given the uncertain outlook. 'We have talked to the senior management of various banks on the interest rate issue and hope that it can be lowered to around the prime rate. We can accept prime rate plus 1 or 2 percentage points as our profits should be able to cover this. But we feel prime rate plus 3 or 4 percentage points is too high,' said Mr Chan, director of the Hong Kong Chan Kee Foods Group. The alliance, which includes business owners and solicitors, said more than 20 of about 50 SMEs it referred to banks were granted loans totalling more than HK$10 million with interest rates as high as the prime rate plus 4 percentage points. The loans ranged from about HK$500,000 to HK$5 million. The alliance intends to submit a report on members' views to Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan next week. A spokesman for the Trade and Industry Department said, as of December 24, it had received 65 applications under the SME loan guarantee scheme and approved 36 for loans totalling more than HK$115 million. The department also received 435 applications under various sub-schemes and granted HK$816 million in loans to 278 companies. No applications had been turned down. The spokesman said the interest rate was determined by the lender, and reflected the loan risk. If the level of loan guarantee was raised above 70 per cent, a balance needed to be struck on the use of public funds. This month, Chief Executive Donald Tsang Yam-kuen unveiled plans to increase loan guarantees for SMEs to as much as HK$100 billion. The maximum loan available to each enterprise was increased from HK$1 million to HK$6 million, including up to HK$3 million in revolving credit.