LCQ8: Special 100% Loan Guarantee
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Question:
The Financial Secretary proposed in the Budget delivered in February this year that the application period of the Special 100% Loan Guarantee (Special Loan) under the SME Financing Guarantee Scheme be extended to the end of March next year. Regarding the implementation situation of the Special Loan, will the Government inform this Council:
(1) of the respective numbers of applications received, approved, rejected and being processed by the lending institutions participating in the vetting and approval of the Special Loan since the introduction of the Special Loan in April 2020 till the 31st of last month; in respect of rejected applications, the trades and industries in which the applicant enterprises were engaged, and the reasons for their applications being rejected;
(2) of the average and longest time taken by the lending institutions for processing the applications mentioned in (1), as well as the total amount of loans granted and the average loan amount;
(3) of the number of cases involving applicant enterprises deferring their loan repayment, or even going into liquidation and the amount of money involved, since the introduction of the Special Loan till the 31st of last month; the current amount of total default claims and the default rate of the Special Loan as a whole; and
(4) whether the authorities have enhanced the arrangements of the Special Loan, such as relaxing the application thresholds, requesting the lending institutions participating in the vetting and approval of the Special Loan to expedite the progress of the vetting and approval as well as the disbursement of loans, etc; if so, of the details; if not, the reasons for that?
Reply:
President,
The Government's consolidated reply to the four parts of the question is set out below:
From its launch in April 2020 to end March 2023, the application and default figures of the Special 100% Guarantee Product under the SME Financing Guarantee Scheme (SFGS) are as follows:
| Number of Applications Received | 66 244 |
| Number of Applications Approved | 61 364 |
| Number of Applications under Processing | 506 |
| Number of Applications Rejected (Note) | 352 |
| Total Loan Amount of Approved Cases ($) | 124.3 billion |
| Average Loan Amount of Approved Cases ($) | 2.03 million |
| Loan Guarantee Amount of Default Cases ($) | 4.2 billion |
| Default Rate | 3.38% |
As regards cases involving deferment of repayment and liquidation, the HKMC Insurance Limited (HKMCI), the administrator of the SFGS, does not maintain such information.
The main reasons for not approving the Special 100% Guarantee Product applications under the SFGS include ineligibility and failure to provide necessary documents of proof. Some applications were not approved owing to involvement of suspected illegal activities. Applications that were not approved mainly involve trading, retail, professional services, engineering, wholesale sectors, etc.
The time taken for vetting the Special 100% Guarantee Product applications depends on the actual circumstances of each case, such as the time required for applicant enterprises to submit all the required documents to banks. In general, the HKMCI can approve a loan within several working days upon receipt of a lending institution's submission of the application with all the required documents, with about 90 per cent of the applications approved within five working days. The HKMCI and lending institutions will continue to explain clearly to enterprises the various documentation requirements, and vet the applications as quickly as possible.
Since the launch of the Special 100% Guarantee Product, the Government has introduced enhancements several times, including raising the maximum loan amount, extending the maximum guarantee period and the maximum duration of the principal moratorium arrangement, thereby reducing greatly the burden of small and medium enterprises. The Government will continue to monitor closely the applications and the operation of the SFGS, and review its effectiveness.
Ends/Wednesday, April 26, 2023
Issued at HKT 12:05
Issued at HKT 12:05
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