During the pandemic, Hong Kong introduced a special scheme to assist SMEs as the economy stalled due to closed borders. Secretary for Commerce Algernon Yau stated that maintaining a 100% loan guarantee is a heavy burden, with no decision to reintroduce the scheme currently.
To aid small and medium-sized businesses facing loan repayment pressure, Hong Kong’s de facto central bank established a task force with local banks committing to fair loan access. Concerns arose after a meeting on property loan tightening by banks post-pandemic recovery.
Under the pandemic scheme, HK$143.2 billion benefitted 40,000 businesses and 400,000 employees. The default rate is now at 9.2%, with a sharp increase in defaults and guaranteed loan amount. Hang Seng Bank’s George Leung highlighted potential market improvement due to anticipated US interest rate cuts.
Leung expected two rounds of interest rate cuts totaling 0.5% by year-end. Despite positive economic impacts, he reminded that other factors like trade and investment influence Hong Kong’s situation.
Banks offer support in checking loan status to SMEs facing cash flow challenges, aiming to avoid loan recalls. A survey by the Hong Kong General Chamber of Commerce revealed that 74.3% of SMEs cited cash flow as their top upcoming challenge.