Loan Guarantee Scheme (LGS), enhancement measures to the small and medium enterprises (SME), will be implemented on Thursday, said the government of Hong Kong Special Administrative Region (HKSAR) on Monday.
Ten participating lending institutions (PLIs) on Monday completed the legal procedures with the government and are ready to take on SGS applications for the enhancement measures.
The Trade and Industry Department of Hong Kong will start to accept applications from the PLIs on Nov. 6.
The enhancement measures aim to provide greater support to SMEs in the middle of the global financial turmoil. For SGS, the sub-ceilings for the Business Installations and Equipment Loans (BIE) and Working Capital Loans (WCL) will be removed, while the overall maximum amount of guarantee for each SME is maintained at 6 million HK dollars (775,000 U.S. dollars).
In addition, the maximum guarantee period for WCL will be extended from two years to five years. Each SME will also be allowed to recycle the guarantee once after it has fully paid up the loan backed up by the guarantee, which means each SME will be able to obtain a maximum amount of guarantee of 12 million HK dollars in its lifetime.
Moreover, the indicative ceiling of guarantee exposure for each PLI will be increased from 1.25 billion HK dollars to 1.5 billion HK dollars in order to provide more quota for the PLIs in granting loans. (7.74 HK dollars = one U.S. dollar)
