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Employment Support Scheme and SME Financing Guarantee Scheme

Hong Kong Government relief measures in response to COVID-19

The spread of COVID-19 has caused disruptions to many individuals, businesses, their owners and the markets.  To deal with the COVID-19 crisis, HK government has taken some exceptional measures costing a total of HK$287.5 billion (which is approximately 9.5% of HK GDP).

 


Here are the two key initiatives.

Employment Support Scheme (ESS)

Who can apply All private sector employers who have made Mandatory Provident Fund (“MPF”) contributions or have set up Occupation Retirement Schemes for employees are eligible for ESS. The relevant accounts should be set up on or before 31 March 2020 (i.e. no backdating to or before that date).
How much the applicants can get

Wage subsidies for each employer are calculated based on 50% of wages (subject to a wage cap of $18,000 per employee per month) paid at a “specified month” (i.e. max subsidy per employee per month = $9,000).

A "specified month" is any month between December 2019 and March 2020 selected by the employer. The wage subsidies are to be made in two tranches:

  • 1st tranche: covers the period of June, July and August;
  • 2nd tranche: covers the period of September, October and November.
When to pay the wage subsidies
  1. The first tranche subsidies would be handed out to employers three to four weeks after an application was made.
  2. The second tranche subsidies is expected to be made in September.
Self-employed persons (SEPs) For self-employed persons who have set up an active MPF account on or before 31 March 2020 (excluding backdating) and with that account remaining opened as of the same date, a one-off lump sum subsidy of HK$7,500 will be provided.
How to apply

Eligible employers and SEPs should submit online application from 25 May to 14 June 2020.

Employers and SEPs applying for the ESS are required to authorise the ESS processing agent (appointed by the Government) to receive MPF record certificates directly from the MPF trustees, in order to confirm the information related to MPF contributions. Employers are not required to submit such information at the time of application, and MPF trustees will not charge employers and SEPs any fees on the issue of the certificates.

The Government will soon announce other detailed arrangements about the ESS including the online application procedures, monitoring mechanism and calculation of penalty.

Notes for ESS applicants

Employers joining the scheme have to:

  1. provide an undertaking not to implement redundancies during the subsidy period (Note); and
  2. spend all wage subsidies from the Government in paying wages to their employees.

If an employer fails to comply with the undertaking, the Government will claw back the unspent balance of the wage subsidy or/and impose other penalty.

Note: The number of employees on payroll (i.e. with pay) during the subsidy period cannot be smaller than the number of employees (with or without pay) in March 2020 .


SME Financing Guarantee Scheme (SGS)

 

80% Guarantee Loan

90% Guarantee Loan

100% Guarantee Loan

Who can apply

Hong Kong registered companies who have been operating for at least one year on the date of guarantee application.

Not applicable to lending institution or the lender’s affiliates.

Hong Kong registered companies.

Not applicable to lending institution or the lender’s affiliates.

Hong Kong registered companies who have been operating for at least three months as at end-December 2019; and have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019.

Not applicable to a listed company, lending institution or the lender’s affiliates.

Maximum facility amount per borrower HK$18 million, including credit facilities guaranteed under 80% and 90% Guarantee Products [for each eligible enterprise and its Subsidiaries and its Related Entity(ies)]. HK$8 million, including credit facilities guaranteed under 80% and 90% Guarantee Products [for each eligible enterprise and its Subsidiaries and its Related Entity(ies)]. HK$4 million or total amount of employee wages and rents for six months, whichever is lower.
Type of loan Revolving and non-revolving facility without any restriction on the proportion between them Term loans only Loans of non-revolving nature only
Interest rate to be charged
  • 10% per annum
  • Interest subsidy of an actual interest rate minus 2.75% (subject to a cap of 3%) for one-year period is provided
  • Actual interest rate will be determined by the lenders
  • 8% per annum: with operating history of more than three years
  • 10% per annum: with operating history of three years or less
  • Interest subsidy of an actual interest rate minus 2.75% (subject to a cap of 3%) for one-year period is provided
Prime Rate minus 2.5% per annum (i.e. current interest rate at 2.75%)
Maximum repayment period Up to 7 years Up to 5 years Up to 3 years, with an optional principal moratorium for the first six months
Annual guarantee fee to be charged Up to 0.45% on loan amount / limit of the facility

Up to 0.36% of loan amount: with operating history of more than three years.

Up to 0.45% of loan amount: with operating history of three years or less

Waive
Application period Until June 2022 Until June 2022 Until April 2021

 

 

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