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Borrow Smart – Introducing the Special 100% Loan Guarantee


The government has recently announced that it will extend the Special 100% Loan Guarantee for SMEs again to June 30, 2022. What exactly is the Special 100% Loan Guarantee? In this article, we explain and share what SMEs have to pay attention to when applying.

Special 100% Loan Guarantee

The Special 100% Loan Guarantee is one of the products in Hong Kong’s SME Financing Guarantee Scheme. The SME Financing Guarantee Scheme was launched by the Hong Kong Mortgage Corporation Limited to assist SMEs and non-listed companies in obtaining financing to meet business needs. The Corporation provides 100% credit guarantee for these businesses.

Who Can Apply

  1. The borrowing company must have been operating in Hong Kong for at least 3 months before June 30, 2020;
  2. Must be a limited company, sole proprietorship, partnership or unincorporated group;
  3. Have business operations in Hong Kong and be registered under the Business Registration Ordinance (Chapter 310);
  4. Non-operating loan business or providing funds for loan business through any means;
  5. A related company that is not a lending institution; or
  6. A non-listed company.

Application Criteria

  1. The monthly turnover of the borrowing company from February 2020 is 30% or more lower than the average monthly turnover of any quarter from January 2019 to June 2020. Borrowing companies need to provide relevant supporting documents, generally banks will require/review the following documents:
    • Bank statement (the bank will use the transaction deposited in the corporate bank to perform the preliminary screening steps. Generally speaking, this method may not be fair to the applicant company because the bank statement does not accurately reflect the income of the enterprise);
    • A profit and loss statement that has been signed and verified by the directors (this generally takes time to prepare, but it can more accurately reflect the status of the company’s income); ors
    • An audit report issued by a certified public accountant, which can show a 30% decrease in turnover (this generally takes time to prepare, and the report requires a second audit report to show the decrease in turnover, which is more difficult).
  2. The borrowing company does not have any outstanding arrears for more than 60 days.

Application Period

April 20, 2020 to June 30, 2022.

Loan Amount

The loan amount is determined by whichever is the lower of the following two:

  1. The sum of the 18-month salaries of employees of the applicant company (usually certified by MPF contributions) and rental expenses (proof of lease agreement is required); or
  2. HKD6 million.

Loan Interest Rate and Maturity

The annual interest rate of the loan is 2.5% lower than the Hong Kong dollar prime rate (“Primary Rate”), and the loan term is up to 8 years.


Repayment is made in installments, and all borrowings must be fully amortized before the end of the guarantee period. In addition, the borrowing company can apply for up to 18 months of interest repayment without repayment of the principal, so that funds can be used more flexibly.


  1. The interest rate is low, while the cost of borrowing is also low;
  2. In the first 18 months, you can choose to repay interest but not the principal, which increases cash flow flexibility; and
  3. You can repay in a lump sum without any handling fees.


  1. The loan amount is not high;
  2. There are many documents to be submitted;
  3. Many prerequisites (for the company’s length of operation, and proof of decreased income);
  4. The borrowing elasticity is low, the borrowing amount cannot be increased, and the repayment needs to be paid in accordance with the repayment schedule.

Application Experience

We have been assisting clients in different industries for application, and we would like to share some of the various problems they have encountered.

  1. By submitting the application together with the income statement and audit report, the indication of decline in the company’s income will be clearer, which will make the application process smoother;
  2. The bank will conduct due diligence on customer identities to understand the background and credit history of the company and shareholders, etc. If the bank’s customer identity due diligence is not met, approval will not be given;
  3. Although the company’s loans will be guaranteed 100%, at the same time, the bank will require shareholders to sign a personal guarantee statement, so even if the company goes bankrupt, shareholders have responsibility to repay the debt;
  4. If the company has changed company information, but has not submitted the updated version it to the bank, the company will need to fill in relevant bank application forms and submit relevant supporting documents (e.g. Company Registry files). This is because the bank needs to update the information before continuing to process the relevant information, which is why applications may take 1 to 2 weeks longer;
  5. After applying, the fastest approval time is generally one month, but if there are other problems in the way, the approval time will be longer.


The advantages and disadvantages of the Special 100% Loan Guarantee are quite clear. If a company needs funds for emergency response due to the epidemic or temporary economic downturn, so as to tide over difficulties, the Special 100% Loan Guarantee is definitely your first choice. Yet, if you need additional funds to expand your business, you can pay attention to Pacers’s other articles about the financing guarantee programs for SMEs.

Pacers is a company that provides multifaceted and professional consulting services. We are eager to grow with our clients, so if you encounter any issues on business management, you’re welcome to contact us through our website or email at info@pacersconsulting.com.

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