Easing your Company’s Financing Situation: Guide to Small and Medium Enterprises (SMEs) Loan and Subsidy Programs | Reap Global

Easing your Company’s Financing Situation: Guide to Small and Medium Enterprises (SMEs) Loan and Subsidy Programs

Frieda

6 min read

It’s not easy to start a business, but it’s even more difficult to maintain one at times like this. Owners have to juggle between keeping the business running while seeking opportunities for expansions. During this economic slump,financing and operation have become struggles for SME owners. In addition to keeping its competitiveness in the market, the business also needs to deal with financing as well. Among different SME financing schemes and loan options, how should you choose the most suitable plan to help you with your business? Let’s get through this tough time together! Use our guide and compare financing options from the government, semi-governmental organizations, and private institutes, before deciding which scheme is the best for your SME.

Subsidy Schemes

[Government] Enterprise Support Scheme (ESS): Encouraging Internal R&D

[Government] SME Development Fund (SDF): Eligible to different types of development

[Government] BUD Fund: Focus on brand development, restructuring or sales promotions

[Government] SME Export Marketing Fund (EMF): Focus on traders and exporters 

Loan Schemes

[Government] SME Loan Guarantee Scheme (SGS): financing fund for business equipment purchasing or business operations

[Semi-governmental organization] SME Financing Guarantee Scheme: financing fund for business equipment purchasing or business operations

[Bank] Different loan options from banks

SMEs Loan #1: Government Subsidy and Loan Scheme

The Hong Kong Government has been putting more effort in supporting innovative start-ups in recent years by setting up more subsidy and loan schemes for easing SMEs operation and financing. Most of the schemes are applicable to SMEs from different industries. Apart from that, the SME subsidy amount has increased so businesses can get more business capital. Subsidy schemes from the government are suitable for most of the SMEs. The schemes are mainly to assist SMEs with loans and financing difficulties to suit their business and operation purposes.

Innovation and Technology Fund: Enterprise Support Scheme (ESS)

Enterprise Support Scheme (ESS) aims to encourage and support local private companies to conduct in-house research and development. ESS is available for application for funding all year round. The project duration is 24 months in general. Recipient companies can own the intellectual Property Rights and the benefit-sharing of the commercialized R&D results is not mandatory.

Trade and Industry Department: SME Development Fund (SDF)

SME Development Fund (SDF) provides funding for projects which aim at enhancing the competitiveness of non-listed Hong Kong enterprises. Activities under the projects may include seminars, workshops, conferences, exhibitions, research studies, award schemes, codes of best practices, databases, service centers, support facilities, and technology demonstrations, etc.

Trade and Industry Department: Dedicated Fund on Branding, Upgrading and Domestics Sales (the BUD Fund)

The BUD Fund includes the Mainland Program and the FTA program. The Mainland program aims to provide support for Hong Kong enterprises to develop their business in the Mainland. For the FTA program, it aims to support enterprises to develop their brands, upgrade and restructure their business operations, and promote their sales, so as to facilitate their business development. Here are the details for the BUD Fund:

Trade and Industry Department: SME Export Marketing Fund (EMF)

SME Export Marketing Fund (EMF) encourages and supports SMEs expanding their markets outside Hong Kong by providing financial assistance to SMEs for participation in export promotion activities.

Trade and Industry Department: SME Loan Guarantee Scheme (SGS)

SME Loan Guarantee Scheme (SGS) provides a loan guarantee to SMEs to help them secure loans from the participating lending institutions for acquiring business installations and equipment or meeting the working capital needs of general business uses.

SMEs Loan #1: Semi-governmental Organization Financing Schemes

Financing schemes provided by the semi-governmental organizations include SME Financing Guarantee Scheme offered by The Hong Kong Mortgage Corporation Limited, which aims at helping local SMEs to obtain financing for their operation and business.

SME Financing Guarantee Scheme

The Hong Kong Mortgage Corporation Limited (HKMC) launched The SME Financing Guarantee Scheme in late-2019. The scheme focuses on assisting small-scale and SMEs which are still at the beginning of the business stage. The Scheme provides a guarantee coverage of 50% to 80%, and 90% Guarantee Coverage and a Special 100% Loan Guarantee.

The details of the Scheme:

SME Loan #3: SME Loan Options from Banks

When facing financing difficulties, loans from banks are most likely the first options that SME owners would think of. Getting a loan from a bank is the most traditional way of dealing with financing difficulties. Banks also offer a variety of SME loan options for SMEs and start-ups. When choosing a loan scheme, some of the schemes indicate that guarantee is not required. Enterprise could also choose loans with a guarantee, which the loan ceilings would be higher. Choosing loans from banks is more flexible and fewer requirements, but for enterprises with fewer years of operation experiences, corporate directors are required to provide a personal guarantee in general, and they need to submit their personal credit reports as well. In view of this, some banks will also help apply for SME Financing Guarantee Schemes to increase loan amounts and reduce risks.

Banks

Of all the financing options, some of the SME loan options take a longer time for applications. Applicants also need to be careful with the procedures and details. When dealing with daily operation expenses and emergent extra cash flow, you could also explore other options for financing, so to ease your mind when juggling with business operations and cash flow. Reap – Secure Online Payment Platform – enables SME owners, like you, to pay expenses and collect revenue – to and from anyone and anywhere – entirely via credit card. Even if your payees don’t accept credit card payments, you could still pay them in 40 different currencies. You can also enjoy 58 days of interest-free financing and ease payment terms, so you could keep your cash on hand to grow your business. You can also track and manage your payment collections on Reap, as well as set up automated payment and schedule recurring payments, making it easier to keep up with your monthly payment schedule. With Reap, you can even earn air miles, cashback, or program points through your credit cards! Explore the potentials on your wallet by registering your account on Reap for FREE!