Hong Kong Banks Bolster SME Support with Expanded Task Force

2025-03-03 11:00:24

In a decisive move to alleviate cash flow pressures among small and midsize enterprises (SMEs), 18 leading Hong Kong banks have broadened the remit of their joint SME Task Force. The initiative, which originally focused on easing liquidity challenges within the construction sector, now invites broader participation from additional banks to craft more balanced financial solutions for troubled SMEs.

A Collaborative Approach to Liquidity Relief

Under the newly established joint consultation mechanism, any SME facing sudden liquidity crunches can directly approach its lender for immediate relief. With the client's consent, the lending bank can initiate discussions with partner institutions to negotiate tailored financial arrangements. This collaborative framework is designed to quickly ease cash-flow strains and offer SMEs a lifeline during unexpected financial downturns.

SMEs, which make up 98% of all businesses in Hong Kong and employ 45% of the private-sector workforce, remain a critical pillar of the territory’s economy. Recognizing their significance, member banks are committed to ensuring that these enterprises have access to the financial support needed to sustain operations during turbulent times.

Robust Capital Commitments and Regulatory Support

The momentum for enhanced SME lending was further underscored last October, when 16 major banks pledged to allocate HK$370 billion (approximately US$47 billion) from their loan portfolios specifically for SMEs. In tandem with these commitments, the Hong Kong Monetary Authority (HKMA) took proactive steps by reducing its countercyclical capital buffer ratio. This regulatory adjustment unlocked an additional HK$300 billion to HK$400 billion in liquidity, thereby reinforcing the financial system’s capacity to extend more credit to SMEs.

Flexible Repayment Options to Ease Financial Burdens

To further mitigate the financial strain on SMEs, banks have introduced flexible repayment options. Enterprises that previously accessed funds through government-backed loan schemes can now apply for a principal repayment grace period of up to one year. Similarly, SMEs that obtained financing on the open market are given the option to renew their partial principal repayment schedules, thereby easing immediate cash flow pressures.

Key Players in the Initiative

The 18 banks participating in the expanded task force include: