Special Loan Guarantee Scheme

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General Information

The Special Loan Guarantee Scheme (SpGS) aims to help enterprises secure loans from 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.

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Enterprises with substantive business operation (note 1) in Hong Kong and registered in Hong Kong under the Business Registration Ordinance (Chapter 310), except listed companies, lending institutions and their associates.

Other requirements

• 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);
• Personal guarantee is required of the enterprise owner or, in the case of a limited company, shareholders together holding more than 50% of the equity interest of the enterprise;
• the enterprise must have no outstanding default in any authorised institution as defined in the Banking Ordinance;
• the loans should not be used for repaying, restructuring or repackaging other loans.

note 1: The applicant should have substantive business operation in Hong Kong. In this connection, an enterprise holding a shell business registration or having all its major business operation outside Hong Kong will not be regarded as having substantive local business operation. For details, please refer to the "Guidelines on the requirement of "substantive business operation" under the Special Loan Guarantee Scheme and SME Loan Guarantee Scheme"

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The application period will be extended up to 30 June 2010.

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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, a revolving letter of credit line in support of trade finance etc.). Personal guarantee(s) from the 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% equity interest.

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 (including loans that are referred to as classified loans by Hong Kong Monetary Authority).

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The Government will provide 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 from the PLIs a revolving credit line of up to $6 million.

The maximum guarantee period for each loan is 60 months after the start date (note 2), or up to 30 June 2015, whichever is earlier.

note 2: 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.

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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 30 June 2015, whichever is earlier. The period between each repayment of principal should not exceed three months.

In respect of a revolving credit line, the repayment should be made to the PLI over a maximum of 60 months or up to 30 June 2015, whichever is earlier. There will not be any fixed repayment period for revolving loans, but the PLIs are encouraged to term-out the loans at a suitable juncture to ensure an orderly repayment of the outstanding loan before expiry of the guarantee period.

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1. An enterprise applies for loan(s) from a PLI. At the time of the loan application, the enterprise must provide relevant information for the PLI's assessment of its current credit and financial information. Except for an enterprise which has been established for less than 18 months as at the date on which its application for the loan is received by the PLI, the enterprise shall:
   

   • (if the enterprise is a company within the meaning of the Companies Ordinance (Cap. 32)) submit an audited account of its latest financial year which has been duly certified by the auditor of the enterprise. However, if it is consistent with the prevailing practice of the PLI in respect of loans granted outside the SpGS, the PLI may permit the enterprise to submit its latest available audited account instead; or

   • (for all other enterprises) submit the financial statements of its latest financial year including a certified balance sheet and profit and loss account. However, if it is consistent with the prevailing practice of the PLI in respect of loans granted outside the SpGS, the PLI may permit the enterprise to submit its latest available financial statements instead.

2. The PLI assesses the loan application(s) and determines whether it/they require(s) the guarantee(s) of the SpGS.

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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For enterprises who are interested in obtaining business loan(s) from lending institution(s), reference may be made to this guide.

All enterprises interested in applying for a loan under SpGS should complete an Application Form and lodge through the PLIs. The application procedure is simple and involves no charges. The application form can be downloaded at this homepage. The PLI should endorse and send in the application form to Trade and Industry Department. Applications may be submitted by fax or hand. The opening hours of the Special Loan Guarantee Scheme Unit are -

Mondays to Fridays: 0845 to 1230 and 1330 to 1800
(Lunch break- 1230 to 1330)

If the application is accepted, Trade and Industry Department will inform the PLI of the result and a Notification of Result of Application (i.e. approval-in-principle) will be granted in favour of the PLI for the loan concerned. Trade and Industry Department will issue a guarantee in favour of the PLI in accordance with the Deed (note 3) upon receipt of the information listed below:-

1. the completed application form in original form (if the application is submitted by fax);
2. the Acceptance of Conditions for the Issue of a Special Loan Guarantee signed by the Borrower; and
3. a Confirmation of Particulars of Special Loan Guarantee completed and signed by the PLI. In this Confirmation, the PLI should confirm the start date of the facility, which should fall within 60 days from the date of the Notification of Result of Application (i.e. approval-in-principle).

note 3: The Deed herein refers to the original Deed as amended by the Supplemental Deed and the Second Supplemental Deed.

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

*note 4: The United Commercial Bank is under the acquisition by the East West Bank, and the assets and liabilities arising from the operations of United Commercial Bank Hong Kong Branch will be transferred to the East West Bank.

(Last updated on 19.03.2010)

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Number of applications received after the implementation on 15 December 2008 –

Cumulative amount of loan approved: HK$70,470,115,615.90

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For general enquiries about the SpGS, please contact :

Address:	Special Loan Guarantee Scheme Unit Trade and Industry Department 6/F, Trade and Industry Department Tower 700 Nathan Road, Kowloon
Tel.:	2398 5132
Fax:	3690 1767 / 3741 2177
Email:	spgs_enquiry@tid.gov.hk

For enquiries about individual application for guarantee for loans under the SpGS, terms of loans and application results, please contact the Participating Lending Institutions as listed above.

Note: 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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