Hong Kong personal loan scheme for unemployed extended until next year to tackle joblessness during coronavirus pandemic
- Financial Secretary Paul Chan says personal loan guarantee scheme ‘helped a lot of people’ last year
- Society for Community Organisation says poorest residents working casual jobs unable to qualify for loan scheme
A personal loan guarantee scheme for Hong Kong residents who lose their jobs amid the Covid-19 pandemic would be extended until April next year, the finance chief said in his budget speech on Wednesday.
An additional HK$6.6 billion (US$845.9 million) would also be dedicated to creating 30,000 temporary jobs to tackle the health crisis and ease unemployment, Financial Secretary Paul Chan Mo-po added.
“The 100% Personal Loan Guarantee Scheme rolled out last year has helped a lot of people. I will extend the scheme for one year until the end of April next year,” he said.
The scheme aims to help unemployed individuals in need of a loan during the ongoing coronavirus pandemic.
The maximum loan amount per applicant will be increased from the current six times an individual’s monthly income during employment to nine times, with the cap raised from HK$80,000 to HK$100,000.
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The maximum repayment period will be extended from six years to 10, while the maximum duration of principal moratorium – or the period where the borrower is not required to make any repayment – will be extended from 12 months to 18.
Borrowers must be permanent residents aged 18 and above and out of work for at least two months. Proof of income loss must be provided. Self-employed individuals, freelancers and casual workers are also welcome to apply.
According to the Financial Services and the Treasury, banks have received more than 73,000 applications for the scheme as of late January, involving a total loan amount of about HK$2.53 billion and an average loan size of around HK$69,000.
But some unemployed residents like 57-year-old Angel Law, who previously worked at a cha chaan teng restaurant, were hesitant to apply for the scheme.
“Even with the 10-year repayment period, I will only apply if there’s really no choice as I have to worry about returning the money eventually,” said Law, who was currently living off her savings. “I don’t know how the economic situation will change or if I’ll get a suitable job in the next few years.”
Sze Lai-shan, deputy director of the Society for Community Organisation (SoCO), said the scheme was not a realistic means of supporting the city’s poorest.
“Many of them are working casual jobs for a few days and they are [not eligible] for the scheme,” Sze said.
Sze said she hoped the government would also allocate subsidies to the underemployed for at least six months.
Meanwhile, the government’s Anti-Epidemic Fund will create 30,000 temporary jobs focused on tackling the local Covid-19 outbreak, such as assisting in testing venues.
Chan said about HK$13.2 billion from the fund had been allocated to boost temporary jobs in the public and private sectors, with 60,000 created last year.
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Sukey Lai, a 32-year-old freelance hair and make-up artist, lost most of her income after social-distancing restrictions hurt her livelihood.
“I may apply for these jobs if there is something suitable,” she said. “But I’ll be a little worried as there might be a risk of catching the virus.”
Hong Kong’s unemployment rate for the three months ending in January held steady at 3.9 per cent, although the government warned tough social-distancing measures amid the ballooning health crisis posed a serious threat to job security.
The figure was unchanged from the previous rolling three-month period running from October to December last year.
