Upgrades set for SME finance scheme
February 01, 2012
Financial Secretary John Tsang has proposed enhancing the SME Financing Guarantee Scheme by increasing the maximum loan guarantee ratio to 80% for which the Government will provide a guarantee commitment of $100 billion while the guarantee fee will be lowered.
Delivering his 2012-13 Budget at the Legislative Council today, Mr Tsang said under the current scheme launched by the Mortgage Corporation, the maximum loan guarantee ratio is 70%.
The concessionary measures will include a new loan guarantee product with a higher ratio of 80% for which the Government will provide a total guarantee commitment of $100 billion.
While the annual guarantee fee for a loan with a guarantee ratio of 70% currently stands at 32%-35% of the loan facility’s interest rate, that for a loan with a guarantee ratio of 80% under the new concessionary measures will be lowered to 10%-12%.
The concessionary scheme will be open for application for nine months. Taking into account the anticipated default rate, the estimated government expenditure will be about $11 billion.
To further assist small and medium enterprises, the Export Credit Insurance Corporation will introduce new terms in their insurance policy, which will include special concessions on February 6.
It will also extend the sales-by policy launched in March last year to contracts between Hong Kong exporters’ overseas or Mainland subsidiaries of which the Hong Kong policyholders have control, and their buyers.
He also proposes waiving business registration fees for 2012-13, which will cost the Government $1.9 billion, and reduce profits tax for 2011-12 by 75%, subject to a ceiling of $12,000. The reduction will be reflected in the taxpayers’ final tax payable for 2011-12. The proposal will benefit all taxpayers who are liable to profits tax and will cost the Government $1.12 billion.
He proposes halving the charges for import and export declarations and estimates each enterprise engaging in import-export business will save $9,000 a year on average. This will cost the Government $750 million a year.
Abolishing capital duty levied on local companies is also proposed. It will cost the Government $90 million a year.
