SMEs Face Loan Repayment Struggles As Interest Rates Shift In Hong Kong
SMEs Encounter Increasing Loan Repayment Pressures
Small and medium-sized enterprises (SMEs) in Hong Kong are facing renewed pressures related to loan repayments, particularly as interest rates change globally. Secretary for Commerce and Economic Development Algernon Yau Ying-wah has ruled out the reintroduction of the pandemic-era guaranteed loan scheme aimed at supporting SMEs.
Government's Position on Loan Guarantees
The government ceased accepting applications for the special 100% Loan Guarantee Scheme in March, noting a current default rate of 9.2%, which indicates a growing concern over non-repayments. The total loan guarantee amount has increased to HK$13.2 billion (US$1.7 billion) since its launch.
Economic Recovery and Interest Rates
As Hong Kong's economy shows signs of recovery, Yau emphasized the burden of maintaining such guarantees amid fiscal constraints. Recent discussions with local banks have led to initiatives aimed at easing loan access for SMEs struggling to maintain cash flow.
- HK$143.2 billion was approved under the Special Scheme to aid around 40,000 businesses.
- George Leung Siu-kay from Hang Seng Bank forecasts interest rate cuts in the U.S. could stimulate market activity.
- Despite challenges, he believes banks are unlikely to recall loans from SMEs that comply with repayment schedules.
- A recent survey indicated that 74.3% of SMEs cite cash flow as their top concern moving forward.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.