SME Loan Guarantee Scheme

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 (up to a maximum guarantee limit of $5 million); and
2. Working Capital Loans (up to a maximum guarantee limit of $1 million).

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

• registered in Hong Kong under the Business Registration Ordinance (Chapter 310) 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.
  
  

** "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

The maximum amount of business installations and equipment loan guarantee offered to each SME is $5 million, or 50% of the loan approved by the participating lending institution (PLI) concerned, whichever is the less.

The guarantee period is up to a maximum of five years, counting from the first drawdown date of the loan.

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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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Guarantee ceilings and period

The maximum amount of working capital loan guarantee offered to each SME is $1 million or 50% of the loan approved by the PLI concerned, whichever is the less.

The guarantee period is up to a maximum of two years, counting from the first drawdown date of the loan.

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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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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 the Trade and Industry Department of the HKSAR (the Administrator).
4. If the application(s) is/are accepted, the Trade and Industry Department 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-

" √ " means an SME can apply for the relevant loan(s) from the PLI.

(Last updated on 10.10.2008)

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1. Cumulative number of applications under the SME Business Installations and Equipment Loan Guarantee Scheme :

Cumulative amount of guarantees committed under the SME Business Installations and Equipment Loan Guarantee Scheme :

2. Cumulative number of applications for business installations and equipment loan guarantees under the SME Loan Guarantee Scheme :

Cumulative amount of guarantees committed for business installations and equipment loan guarantees under the SME Loan Guarantee Scheme :

3. Cumulative number of applications for working capital loan guarantees under the SME Loan Guarantee Scheme :

Cumulative amount of guarantees committed for working capital loan guarantees under the SME Loan Guarantee Scheme :

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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.

* With effect from 28 April 2008, 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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