The proposed framework of the Scheme is described below. Government will rely on lending institutions to exercise their usual prudent professional judgement in assessing the credit worthiness of the applicants. Companies registered in Hong Kong are eligible. However, the Scheme will not cover loan transactions between two lending institutions or loan transactions between a lending institution and any of its related companies. This is to avoid possible conflicts of interest on the part of the lending institutions.
Loan applications are subject to the usual prudent scrutiny by the lending institutions.
Other than those limitations on the use of the loans which may be imposed by the lending institutions, the Scheme will not impose limitations on the specific uses of the loans. The loan may be offered as a term loan or in the form of a new credit line. We will monitor the situation closely and may revise the ceiling for individual institutions in the light of operational experience. The guarantee period is up to a maximum of 365 days. The lending institutions will determine the interest for the loans they offer to SMEs in accordance with their established principles.