The Special Loan Guarantee Scheme (SpGS) aims to help enterprises secure loans from the participating lending institutions (PLIs) for meeting general business needs to tide over the liquidity problem during the global financial crisis with the Government acting as the guarantor.
The application period has closed on 31 December 2010.
To be eligible to apply for guarantee under the SpGS, enterprises(1) should meet the following criteria:
registered under the Business Registration Ordinance (Chapter 310) (except for listed companies, lending institutions and their associates), and with substantive business operation(2) in Hong Kong;
the enterprise must have been in operation for at least one year on the date of implementation of the SpGS (i.e. 15 December 2008); and
the enterprise must have no outstanding default in any authorised institution as defined in the Banking Ordinance (Chapter 155).
The loans guaranteed under the SpGS can be in the form of either a term loan or a revolving credit line (e.g. overdraft facility, revolving letter of credit in support of trade finance, etc). Personal guarantee(s) from the owner(s) of enterprise is/are required. If the enterprise is a limited company, personal guarantee(s) is/are required from shareholder(s) (whether an individual or a firm) together holding more than 50% of the equity interest of the enterprise.
The loans should be used for meeting general business uses of enterprises. The loans cannot be used in whole or in part, for paying, repaying, restructuring or repackaging any loans, credit facilities or payment obligations.
In respect of a term loan, the PLIs may grant a grace period in the first six months, during which the enterprise may pay the interest only. Thereafter, the loan should be repaid to the PLI by installments over a maximum of 54 months or up to 31 December 2015, whichever is earlier. The period between each repayment of principal should not exceed three months.
The SpGS provides a guarantee of up to 80% of the approved loan. The maximum loan amount for each enterprise is $12 million. Within this limit, an enterprise may obtain a revolving credit line of up to $6 million.
The maximum guarantee period for each loan is 60 months after the start date(3), or up to 31 December 2015, whichever is earlier.
"Enterprise" refers to a legal entity who is engaged in any form of business for the purpose of gain. Non-profit-making or non-profit-distributing organisations are not eligible.
(2) Substantive business operation
To be eligible for the SpGS, an enterprise should have substantive business operation in Hong Kong. A business holding a shell business registration or having most of its main business operation outside Hong Kong will not be regarded as having substantive local business operation.
(3) For term loans, it means the date on which any funds are first withdrawn against the approved loan. For revolving loans, it means the date on which the funds are made available for use by the Borrower.