Hong Kong Mortgage Corp keen to encourage more SME loans

Hong Kong Mortgage Corporation (HKMC) has introduced a range of measures to encourage more small-and-medium sized companies to borrow from the HK$120 billion government guarantee programme.

The move comes at a time when the number of applications from the HKMC SME Financing Guarantee Scheme fell by 37 per cent in the first half of the year to only 415 from 660 in the same period last year. In terms of funding amount, it was down 29 per cent to HK$1.32 billion in the first half compared to HK$1.87 billion a year earlier.

HKMC chief executive Raymond Li Ling-cheung said the drop in the first half was due to the economic slowdown.

“Many SMEs were reluctant to borrow in the first half of this year due to the mainland economic slowdown and the worry over the outlook after the Brexit in June,” Li said.

“If SMEs don’t want to borrow money, we can’t do anything to help them. But for those SMEs that want to borrow money and have found it hard to borrow from banks, we want to encourage them to use the programme which could lend up to HK$80 billion with government guarantee of up to HK$65 billion,” he said.

The government first launched a HK$100 billion special guarantee lending scheme in December 2008 after the financial crisis hit the US and Europe. In January 2011 management of the scheme was transferred to the HKMC.

Under the scheme, the government provides an 80 per cent guarantee to 30 commercial banks so they can lend money to SMEs which do not have sufficient assets to secure bank loans. However, the scheme hasn’t been popular since its launch, with only approval of 11,034 cases amounting to HK$44.4 billion and a government guarantee of HK$35 billion, representing only one third of the total quota.