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HSBC ups SME loan funds by HK$4b

Updated: 2009-09-15 07:37

By George Ng(HK Edition)

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HSBC ups SME loan funds by HK$4b

The headquarters of HSBC is seen between the Standard Chartered Bank head office (center left) and Cheung Kong Centre (right) in Central, Hong Kong. The largest lender in Europe has increased its loan funds for SMEs by HK$4 billion. Bloomberg News

HONG KONG: HSBC yesterday raised its fund earmarked for small and medium enterprises (SMEs) by HK4 billion amid claims by some SME owners that borrowing from banks is still a tough task in general.

The move, the third increase since June this year, has effectively brought the bank's SME loan fund up to HK$20 billion, the lender said.

HSBC has approved more than HK$16 billion in loans to 7,131 SMEs in Hong Kong, the lender said.

The bank has been increasing its SME loan fund since it initially launched the specific-purpose fund with an original amount of HK$4 billion in December last year.

"HSBC is committed to supporting its SME customers. The small business sector is seeing improved market sentiment, and HSBC is positioned to help them seize business opportunities as they arise," said John Coverdale, HSBC Global Co-head of Commercial Banking for Asia-Pacific.

However, many SME owners claim that securing a loan from banks remains a challenging attempt for them as banks continue to keep rigorous requirements for SME applicants on persistent worries about potential credit risk despite a significantly improved SME operating environment compared with the start of this year.

"The situation hasn't changed much," said Chan Shan-ho, Chairman of Hong Kong Small & Medium Enterprises General Association, when asked by China Daily about any improvement in credit availability to SMEs currently.

Chan and other SME owners have previously complained about the "rigorous" requirements set by banks for SME loan applicants even though the government has guaranteed as much as 80 percent of the loans extended to SMEs under its SME Loan Guarantee Scheme (SGS) and the Special SME Loan Guarantee Scheme (SpGS).

The government launched the SpGS scheme in December last year to provide 80 percent guarantees for commercial loans granted by participating lending institutions to eligible SMEs as part of its relief measures aimed at helping SMEs with their liquidity problems during the global financial crisis.

As a result of the rigorous requirements, the utilization rate of the government's SpGS remains low.

According to government data, the cumulative amount of loans approved under this scheme as of last Friday totaled only HK$45.4 billion, or just about 45 percent of the HK$100 billion ceiling the government has set for its guarantees after the scheme was launched over 9 months ago. The scheme will be terminated by the end of this year.

(HK Edition 09/15/2009 page3)

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