HKMA and banking sector introduce new round of measures to support SMEs

The Hong Kong Monetary Authority (HKMA), together with the banking sector, introduced today (29 April) a new round of support measures to assist local small and medium-sized enterprises (SMEs) in navigating the current fast-changing market environment.  The measures were announced following a meeting held by the Taskforce on SME Lending (Taskforce).

Recent tensions in the Middle East have triggered significant fluctuations in international oil prices and fuelled greater uncertainties in the global economy, exacerbating the operational challenges faced by SMEs in some sectors.  In the light of this, the HKMA and the banking sector are introducing a new round of measures to assist SMEs in accessing bank financing, strengthening their business resilience and accelerating their upgrade and transformation:

1. Increase dedicated funds set aside for SMEs: The 18 participating banks in the Taskforce have further expanded the size of dedicated funds set aside in their loan portfolio for SMEs. The total amount has increased from HK$370 billion in October 2024 to over HK$450 billion at present, demonstrating the banking sector's commitment to supporting SMEs.

2. Offer credit relief to affected sectors: Rising oil prices have significantly increased the operating costs of some SMEs, particularly those in the transport and logistics, manufacturing, and import and export sectors. The participating banks in the Taskforce will be accommodative in offering suitable credit relief to SMEs affected by oil price fluctuations, taking into account the circumstances and needs of individual customers while observing the overarching principle of prudent risk management.  Such relief measures1 include flexible repayment arrangements, corresponding loan tenor extensions, and more options for trade facility extensions to alleviate corporates’ cash flow pressure.

3. Expedite the approval process for applications under the SME Financing Guarantee Scheme (SFGS): All the participating banks in the Taskforce and the HKMC Insurance Limited (HKMCI) undertake, under normal circumstances, to complete the SFGS application approval process and informing the applicant of the outcome within 30 business days after receipt of all necessary information. This aims to enhance the efficiency and transparency of the approval process, enabling customers to stay informed about their application status and make flexible planning and financial arrangements in response to market developments and operational needs2.

4. Introduce loans with flexible repayment for SMEs’ transformation: Considering that SMEs may require substantial capital investment during their transformation, the participating banks in the Taskforce will introduce loan arrangements with customised, flexible repayment plans that are tailored to the specific business needs of individual SMEs (for example, partial principal repayment in the early stage of repayment or “step-up” repayment schedules) for supporting their business expansion as well as digital, intelligent and green transformation process.

5. Deepen the use of fintech and data to assist SMEs in obtaining bank financing: The participating banks in the Taskforce are committed to further leveraging fintech and data to optimise the SME loan approval process, thereby providing customers with faster and more suitable credit solutions. Particularly, all major banks with material trade finance business will actively participate in the Cargox Pilot Programme launched by the HKMA. By connecting cargo and trade data through the Commercial Data Interchange data infrastructure and integrating trade finance automation solutions, banks can conduct credit risk assessments of the enterprises more effectively. This will, in turn, expedite the approval process and enhance SMEs’, particularly importers and exporters’, access to and efficiency in obtaining trade finance.

Since 2024, the HKMA and the banking sector have launched three rounds3 of SME support measures to assist SMEs in different industries to cope with uncertainties surrounding the external environment and challenges arising from economic transformation.  To date, these support measures have benefitted SMEs in over 89,000 cases, involving an aggregate credit limit of more than HK$209 billion.

The HKMA and the banking sector will continue to closely monitor market developments, and maintain regular communication with the commercial sector through the Taskforce to understand the needs of SMEs in different sectors and provide appropriate support, thereby promoting Hong Kong’s economic growth and supporting the development and transformation of SMEs.

Background

The Taskforce on SME Lending

The Taskforce on SME Lending was jointly established by the HKMA and The Hong Kong Association of Banks (HKAB) in August 2024.  Participants include representatives of the HKMA, HKAB and 18 banks4 that are active in SME lending.  The Taskforce aims to further strengthen the related work for supporting SMEs at both the individual case and the industry levels.  These include handling individual cases of SMEs encountering difficulties when obtaining bank financing, working out appropriate solutions across banks and enhancing communication among the HKMA, the banking industry and the commercial sector so as to understand the financing needs of SMEs in a more timely manner and supporting SMEs’ development, and upgrade and transformation.