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Hong Kong Monetary Authority announces ‘orderly exit’ from coronavirus-era loan repayment holiday for small businesses
- Six-month scheme, which was extended six times, helped thousands of companies withstand the slump brought on by the coronavirus pandemic
- Participation declined to 1 per cent of eligible companies, or 1,300 firms, as of January, down from 16 per cent of eligible businesses at launch
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The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, announced an “orderly exit” from the loan repayment holiday for small businesses, which is set to expire at the end of July.
The scheme, which began in May 2020 as a six-month measure to help firms survive the business slump resulting from the coronavirus pandemic, allowed thousands of eligible companies to defer payments of principal on corporate loans and mortgages. It has been extended six times.
“The focus of the scheme will move from tiding corporates over the pandemic to facilitating their return to normal repayment,” the HKMA said in a statement Tuesday evening.
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The scheme included the participation of around 100 banks, covering around 120,000 qualified corporate borrowers with an annual sales turnover below HK$800 million (US$103 million) and no serious overdue loans, according to the HKMA.
The participation rate of the scheme declined to 1 per cent of eligible companies, or 1,300 firms, between November and January, compared with 16 per cent, or 19,000 participating businesses, when it was first launched three years ago, according to the HKMA.
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Meanwhile, the number of firms opting for partial repayment of the principal has steadily increased, indicating that the repayment ability of some businesses has improved.
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