Hong Kong Government Covid-19 funding measures – what is available to Fintechs?

As a global firm we have actively tracking and assessing the varied measures which have been made available by governments across the world to support corporates and businesses in response to the Covid-19 pandemic. Building on this work this is the fourth in a series of posts focusing on key Fintech jurisdictions: assessing what funding measures could be available specifically to Fintechs in Hong Kong (from SMES to start-ups). 

Relief packages focused on SMEs

The Hong Kong SAR government has so far put forward three relief packages to support businesses and individuals affected by Covid-19. These relief packages have tended to concentrate on relief for SMEs, with specific measures introduced for a number of particularly hard-hit sectors.

There are no specific, targeted reliefs for Fintechs, however there are a range of measures which fintech companies in Hong Kong may be able to benefit from if they fall within the largely SME perimeters noted below.

SME Financing Guarantee Scheme (SFGS)

The government is providing guarantees through the SME Financing Guarantee Scheme (SFGS) which announced the “Special 100% Loan Guarantee”, principally for SMEs. The Special 100% Loan Guarantee started receiving applications on 20 April 2020. This scheme is applicable to all sectors, and enterprises should have been operating for at least three months as at end-December 2019, and have suffered at least a 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019.

This is not open to listed companies, lending institutions or affiliates of the banks who lend under the SFGS. The maximum loan amount per enterprise is HK$4 million for a maximum of three years, and the principal moratorium arrangement was recently extended to the first 12 months.

Pre-approved Principal Payment Holiday Scheme

The Hong Kong Monetary Authority (HKMA) also recently announced a Pre-approved Principal Payment Holiday Scheme, in which participating banks will pre-approve deferment of loan principal payments falling due between 1 May 2020 and 31 October 2020 of eligible SMEs for up to 6 months. All corporate borrowers that have an annual sales turnover of HK$800 million or less and that have no outstanding loan payments overdue for more than 30 days are eligible.

Employment Support Scheme

The Employment Support Scheme meanwhile, will see the Government provide wage subsidies to eligible employers on the condition that they do not make workers redundant during the subsidy period. The employers must spend the full subsidy on paying wages for their employees. The wage subsidies for each employer is calculated on 50% of salary as at a “specified month” for six months and subject to a cap of $18,000. Employers will be eligible if they have been making Mandatory Provident Fund (MPF) contributions or have set up Occupation Retirement Schemes for employees.

SFC subsidies

Finally, where a fintech holds a licence from the Securities and Futures Commission (SFC) certain individuals will usually be licensed in connection with the firm. There is a recently announced benefit in the form of a subsidy of HK$2,000 to each individual licensed by the SFC.