HKMA advises banks on flexibility with SME collateral

HKMA urged banks to be flexible, even if collateral values have declined.

The government is stepping in to support small and medium enterprises (SMEs) amidst economic slowdowns, driven by prolonged high interest rates and shifting spending patterns amongst residents and tourists.

Financial Secretary Paul Chan announced liquidity support, with the Hong Kong Monetary Authority urging banks to be flexible with SMEs, even if collateral values have declined due to market conditions.

“If those companies can still service their loan, there is no reason to call for early repayment or early partial repayment, or reduction in facilities merely because of the fall in the collateral’s value,” Chan said.

Additionally, the government will assist SMEs in sector-specific expansions. Through the BUD (Dedicated Fund on Branding, Upgrading and Domestic Sales) Fund, financial support is available for exploring new markets, including the Mainland, Middle East, Southeast Asia, and economies with free trade agreements with Hong Kong.

SMEs will also receive help to accelerate digital transformation through initiatives like technology vouchers. Cyberport administers a scheme for the retail and catering sectors, helping them adopt ready-made software solutions.