SME Loan Guarantee Scheme

PLI corner

The SME Loan Guarantee Scheme (SGS) aims to help small and medium enterprises (SMEs) secure loans from participating lending institutions (PLIs) for :

• acquiring business installations and equipment; and
• meeting working capital needs of general business uses.

The overall objective is to assist SMEs to enhance productivity and competitiveness.

The SGS covers the following two types of loans -

1. Business Installations and Equipment Loans; and
2. Working Capital Loans.

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Enterprises, except for lending institutions and their associates, which meet the following criteria are eligible to apply -

• registered under the Business Registration Ordinance (Chapter 310) and with substantive business operation* in Hong Kong; and

• an SME under the definition of the Government of Hong Kong Special Administrative Region (the HKSAR), that is, a manufacturing business which employs fewer than 100 persons in Hong Kong; or a non-manufacturing business which employs fewer than 50 persons in Hong Kong**. In this connection, "business" refers to any form of trade, commerce, craftsmanship, professional, calling or other activity carried on for the purpose of gain, but shall not include any club except a club within the meaning of the Business Registration Ordinance which provides services for the purpose of gain. Under the Business Registration Ordinance, "club" means any corporation or association of persons formed for the purpose of affording its members facilities for social intercourse or recreation and which -
  
  
  1. provides services for its members (whether or not for the purpose of gain); and
  2. has club premises of which its members have a right of exclusive use.
  
  

* The applicant should have substantive business operations in Hong Kong. In this connection, an enterprise holding a shell business registration or having most of its main business operations outside Hong Kong will not be regarded as having substantive local business operations. For details, please refer to the "Guideline on the requirement of "substantive business operation" under the Special Loan Guarantee Scheme and SME Loan Guarantee Scheme" promulgated by the Trade and Industry Department (TID).

** "Number of persons employed" include individual proprietors, partners and shareholders actively engaged in the work of the company; and salaried employees of the company, including full-time or part-time salaried personnel directly paid by the company, both permanent and temporary, at the time of lodging applications under the SGS.

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Guarantee for Business Installations and Equipment Loans

Use of loans

The Business Installations and Equipment Loans should be used for acquiring installations and equipment relating to the applicant's business operations, which may include the following-

1. machinery
   
2. tools
   
3. computer software and hardware
   
4. communication system
   
5. office equipment
   
6. transport facilities
   
7. furniture
   
8. fixtures (e.g. air-conditioning system, built-in cabinets and lighting system, but shall exclude decoration works)

The installations and equipment may be located outside Hong Kong.

The loans may be used for acquiring second-hand installations and equipment. However, the loans cannot be used for financing or re-financing machinery and installations already in the possession of the applicant or its associates.

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Guarantee ceilings and period

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Form of loans and repayment terms

The business installations and equipment loans guaranteed under the SGS must be in the form of either a non-revolving loan or a hire purchase agreement.

The loans should be repaid to the PLI by installments. The first installment should take place not later than six months after the loan has been activated. The repayment interval between subsequent installments should not exceed three months.

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Guarantee for Working Capital Loans

Use of loans

The Working Capital Loans should be used for meeting working capital needs of general business uses of SMEs.

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Form of loans and repayment terms

Working capital loans must be in the form of a non-revolving loan.

The loans should be repaid to the PLI by installments. The first installment should take place not later than six months after the loan has been activated. The repayment interval between subsequent installments should not exceed three months.

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Guarantee ceilings and period

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The amount of guarantee for an SME is 50% of the approved loan, subject to a maximum amount of $6 million. The guarantee can be used to secure loans for either business installations and equipment or working capital , or a combination of both. The guarantee period is up to a maximum of five years, counting from the first drawdown date of the loan.

If an SME has fully repaid the business installations and equipment loan(s) or working capital loan(s) backed up by the guarantee under the Scheme, the SME is eligible for the respective guarantee amount one more time, subject to a maximum amount of $6 million.

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1. An SME applies for loan(s) (i.e. a business installations and equipment loan and/or a working capital loan as the case may be, from a PLI). A limited company is required to pass its latest audited accounts and an unlimited company its latest statements of accounts to the relevant PLI. This requirement does not apply to SMEs that are established for less than 18 months at the date on which the loan application(s) is/are received by the PLI concerned, though the PLI will also assess their current credit and financial information.
2. The PLI assesses the loan application(s) and determines whether it/they require(s) the guarantee(s) of the SGS.
3. The PLI endorses the relevant application(s) for guarantee and sends the application(s) to TID of the HKSAR (the Administrator).
4. If the application(s) is/are accepted, TID will issue guarantee(s) in favour of the PLI for the loan(s) concerned.

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All applications must be lodged through the PLIs. The application procedure is simple and involves no charges.

SMEs wishing to apply for guarantee may contact the following PLIs-

(Last updated on 20.05.2012)

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Cumulative number of applications received under the SME Loan Guarantee Scheme since its launching in December 2001:

Cumulative amount of guarantee committed: HK$17,965,111,193.11

Cumulative amount of loan approved: HK$38,209,265,486.33

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For general enquiries about the SGS, please contact :

Address:	SME Loan Guarantee Scheme Unit Trade and Industry Department 6/F, Trade and Industry Department Tower 700 Nathan Road, Kowloon
Tel.:	2398 5129
Fax:	2396 5067
Email:	sgs_enquiry@tid.gov.hk

For enquiries about individual application for guarantee for business installations and equipment loans and working capital loans under the SGS, terms of loans and application results, please contact the Participating Lending Institutions as listed above.

* All telephone conversations on the enquiry hotlines of the Trade and Industry Department shall be recorded to ensure service quality. The recorded conversations will be kept for 90 days. Members of the public may request for conversations relevant to them recorded in 90 days on a CD, at a charge of $50 per CD.

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