The Deputy Chief Executive of the Hong Kong Monetary Authority (HKMA), Arthur Yuen, will lead a new task force to look into small and medium-sized enterprises (SMEs) which are having trouble with banks over their loan repayments.

This task force was formed in response to calls from small businesses urging lenders to stop requesting early repayments or recalling loans.

Speaking to reporters after meeting with representatives from the Hong Kong Association of Banks on Friday morning, HKMA’s chief executive Eddie Yue said the new body would aim at helping individual SMEs resolve their funding issues.

“Each case has its own background and uniqueness, and each case could be handled differently. I would encourage business chambers or companies to refer cases to the Authority immediately, if they hear or see any firms having difficulties, so that they can be dealt with by the task force and resolved with banks quickly,” he explained.

In another press briefing, the co-chairperson of the task force, Arthur Yuen, said the HKMA has received only a small number of complaints from SMEs which required its intervention.

Yuen added the banking sector has been supporting SMEs, noting that lenders have allowed around 4,000 small businesses to delay their loan repayments since 2020.

He also said a potential interest rate cut by the US Federal Reserve next month could help struggling small firms.

"The interest burden that they (SMEs) are facing right now is perhaps much higher than three years ago,” he told reporters.

“It's really an expectational issue, the forward-looking, where interest rates are heading that would help banks in assessing the repayment ability of a corporate model, including SMEs, because then they will have the interest rate outlook. They fit the interest rate outlook into their credit models, and that would definitely be helpful.”

In face of concerns over the tightening policy of property loans, Yuen said the HKMA has urged lenders to complete their vetting requests for such loans within two weeks, unless applicants fail to provide the adequate information needed.

The Business and Professionals Alliance for Hong Kong (BPA) welcomed the establishment of the task force, saying the new group would help SMEs in acquiring capital and promoting Hong Kong's economic growth.

However, BPA lawmaker Jeffrey Lam said small businesses still need more support to overcome these difficult times.

"The government may consider restarting the 100 percent guaranteed loan and also the payment holiday scheme. That is just pay the interest without repaying the principal, like for a period of 12 months," he said

"We all hope that (in) 2025, things will improve. And I hope as the economic situation improves, cash flow for the companies will also improve."
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Last updated: 2024-08-23 HKT 16:51