Banking sector standing by SMEs


22 Apr 2024

Banking sector standing by SMEs

People may have sensed a change in the local consumer and tourist spending patterns during the recent long Easter holiday.  This change has brought varying degrees of challenges and opportunities to small and medium-sized enterprises (SMEs) in Hong Kong.  Some retailers and restaurants have benefited while others have seen a decline in business.  In this complex and ever-changing economic environment, some SMEs may be facing greater operating pressure.

SMEs are the bedrock of our economy, accounting for 98% of businesses in Hong Kong and creating a large number of employment opportunities.  Thinking back to the times of the social unrest and the pandemic, many corporates’ businesses were hard hit by these events and this prompted the HKMA to collaborate with the banking sector to establish the Banking Sector SME Lending Coordination Mechanism (Coordination Mechanism).  The Coordination Mechanism introduced many rounds of support measures and banks adopted a sympathetic attitude in handling the financing needs of corporates.

The Hong Kong banking sector has grown together with different trades and professions and rendered timely assistance all along.  Right before the Easter holiday, the HKMA together with the Coordination Mechanism announced nine support measures for SMEs.  In order for SMEs to benefit from these measures as soon as possible, the banking sector raced against the clock for the better part of the month to roll out the measures as and when they were ready.  We are pleased to see that all the 11 participating banks in the Coordination Mechanism fully support their SME customers as always.  The 11 banks have all implemented fee waivers or other concessions for eligible SME customers to ease their financial burden, and nine banks have launched unsecured loan products targeting SMEs to give customers more flexibility in managing their cash flows.

In addition, all the participating banks in the Coordination Mechanism have joined the HKMA’s Commercial Data Interchange (CDI) and they will in the future make wider use of commercial data (including e-trade declaration, e-commerce, supply chain, payment and credit reference data) obtained from the CDI and combine it with data analytics to tailor credit products that better serve SMEs’ needs.  In the past, many SMEs, particularly the smaller ones or those without property as collateral, might encounter greater difficulties in obtaining loans.  The CDI launched by the HKMA aims to address this pain point and improve SMEs’ ability to obtain finance.

Today, we are implementing one more of the announced SME support measures: a one-stop SME information platform on the HKMA’s website.  The platform provides information on SME lending services offered by major banks, including their dedicated SME service hotlines for enquiries and their loan products such as trade financing, secured loans and unsecured overdrafts.  We hope that the platform can make it easier for SMEs to shop around so that they can compare and choose among loan products offered by different banks and increase their bargaining power.

Apart from the above new measures, the HKMA will continue to maintain close communication with the Hong Kong Association of Banks, the Chinese Banking Association of Hong Kong and the commercial sectors, and will follow up on the implementation of the remaining SME support measures via the Coordination Mechanism.  The remaining measures include banks giving customers a transition period of at least six months for credit limit adjustments; applying the principles under the Pre-approved Principal Payment Holiday Scheme (PPPHS) to support customers facing difficulties; and facilitating SMEs to switch lending banks.  Specifically, the original lending bank should provide the customer’s existing credit information within seven working days so that the customer can pass on such information to the new lending bank.  For credit facilities secured by property, the original lending bank should endeavour to release the charge over the collateral within six weeks after receipt of such legal instruction.

The Financial Secretary announced in the Budget that the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme will be extended by two years to the end of March 2026.  In general, the HKMC Insurance Limited (HKMCI) can approve a loan within several working days upon receipt of a bank’s submission of the application with all the required documents.  Taking into account the feedback of the commercial sectors, the HKMCI and banks will work together to review the approval process, with a view to further shortening the time needed for processing the applications.

Looking back over the past few years, Hong Kong’s SME operators and staff have demonstrated remarkable resilience amid the series of blows from the social unrest and the pandemic.  The Hong Kong banking sector has been attentive to SMEs’ operations throughout this period, taking an accommodating approach to handling customers’ needs so as to ride out the storm together.

In fact, during the pandemic, the banking sector granted over 118,000 applications for PPPHS and other forms of relief, involving an aggregate amount of HK$1.2 trillion.  This has alleviated the cash-flow pressure of 19,000 SMEs.

The unprecedented scale of these SME support measures shows that, even during periods of uncertain economic outlook, the banking sector is willing to stand in support of SME customers through thick and thin, which is a reflection of the banks’ compassion and commitment to the local community.  Going forward, the HKMA will continue to work with the Coordination Mechanism to encourage the banking sector to keep on standing by SMEs and overcome future challenges together.


Eddie Yue
Chief Executive
Hong Kong Monetary Authority

22 April 2024


Note: The Banking Sector SME Lending Coordination Mechanism was established in October 2019.  The HKMA acts as the convenor of the Coordination Mechanism and participants include 11 banks which are active in SME lending, the Hong Kong Association of Banks and the HKMCI.

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Last revision date : 22 April 2024