Starting a business is easy, but sustaining it is tough. This age-old saying remains relevant today. Whether you’re a startup or an SME that has been operating for a while, when it comes to expanding or upgrading the business, financial challenges are inevitable. What channels are available in the market to provide financial support for SMEs in Hong Kong? What should one be aware of when applying for a SME Loan in Hong Kong?
Bank SME Loans
Many banks and lending companies offer SME Loans in Hong Kong services. These are primarily secured and unsecured loans, with loan amounts reaching up to tens of millions. The annual interest rate usually ranges from 7% to 20%. Borrowers should consider if the loan interest and period meet their needs.
However, SME loan amounts can be substantial. Applicants might need to provide numerous documents, such as company registration proof, invoices, inventory records, and bank statements from the past six months. The approval process is intricate, typically taking 1 to 2 months. For urgent financial needs, traditional bank SME loans might not be the quickest solution.
Virtual banks like ZA Bank and PAOB offer business loans. Their application processes are simpler than traditional banks, and approval times are faster. For instance, PAOB’s loan service offers amounts from HK$100,000 to HK$2,000,000 with loan periods of up to 24 months. PAOB claims that from application to loan disbursement, it only takes five days, allowing quicker access to funds.
To apply for government-guaranteed loans or subsidy programs, certain qualifications are required. These loans and subsidies also come with usage restrictions, making them less flexible for corporate financial management. If you’re looking to infuse extra funds into your company, consider approaching banks and financial institutions for personal loans. Since they’re taken out in an individual’s name, the bank will assess the loan amount based on your income and credit history. The approved loan is often 10 to 20 times your monthly salary. The review process can be as quick as one day, but the amount might not be sufficient for company needs.
Government Business Loans/Subsidy Programs in Hong Kong
Technology Voucher Program (TVP)
Launched in November 2016, the TVP aims to support local businesses in utilizing technology services and solutions to enhance productivity or streamline business operations. Eligible companies can get up to HK$600,000 in subsidies.
To qualify, one must be:
- Registered under the Business Registration Ordinance or Companies Ordinance or a legal entity established in Hong Kong.
- Not a listed company in Hong Kong nor a government-funded organization or its subsidiary.
- Operating a business in Hong Kong relevant to the applied project.
SMEs in Hong Kong can apply for the technology voucher if they meet the above criteria. The subsidy covers technology consultancy services, equipment and software purchases, and technology service solutions and audits.
SME Export Marketing Fund
This fund encourages SMEs to participate in export promotion activities, helping them expand overseas markets. Eligible businesses can receive up to HK$1,000,000 in fund support.
SME Financing Guarantee Scheme
Promoted by the Hong Kong Monetary Authority and implemented by the Hong Kong Mortgage Corporation Insurance Limited, this lending scheme assists cash-strapped SMEs. The insurance company provides credit guarantees of 50%, 60%, 70%, 80%, or 90%, enabling businesses to benefit from lower loan interests and higher loan amounts.