Source:
https://scmp.com/business/banking-finance/article/3080467/hong-kong-orders-banks-grant-unprecedented-six-month-loan
Business/ Banking & Finance

Hong Kong orders banks to grant unprecedented six-month loan repayment holiday to help small businesses survive slump

  • All 162 banks asked to extend principal payment holiday as well as revolving facilities between May 1 and October 31
  • Payment holiday to help sector benefit from HK$1 trillion lending support announced by HKMA
Many of Hong Kong’s small and medium companies have had to shut shop because of the Covid-19 pandemic. Photo: Felix Wong

Hong Kong’s monetary authority has instructed all banks in the city to grant a six-month loan repayment holiday to small and medium-sized enterprises (SMEs), in an unprecedented intervention aimed at helping them survive its worst business slump in decades, as the city’s retail, property and services industries struggle to recover from the coronavirus pandemic.

The intervention by the Hong Kong Monetary Authority (HKMA) – the first such by the de facto central bank since its founding in 1993 – comes as SMEs bear the brunt of dwindling cash flow amid the crisis. Any manufacturing business with fewer than 100 employees, or any non-manufacturing business with fewer than 50 people, can be defined as an SME. On Friday, the HKMA asked all 162 banks to extend a holiday from May 1 through October 31 on principal payments on corporate loans, as well as revolving facilities, to their small corporate borrowers. SMEs with shorter term loans will get a break of three months.