SMEs get credit lifeline to help weather the storm

The Hong Kong Export Credit Insurance Corp unveiled four new measures to help local exporters to tide over the bleak outlook faced by the sector due to the global economic uncertainty. The global trade market is being affected by bleak outlook of European and US economies which incessantly bring about business challenges to Hong Kong exporters The measures include a 5 to 10 per cent discount on insurance premiums and extension of policy cover to sales contracts between Hong Kong exporters' majority-owned subsidiaries on the mainland and domestic or overseas buyers. These are among a cocktail of initiatives the government has unveiled in the past week to boost small firms' financing, lower their costs and strengthen their risk cover. Downside risks on global trade are worse than during the global financial crisis, the corporation's chairman Willy Lin Sun-mo said yesterday. Buyers are afraid of placing orders and do not have sufficient capital to source products, while manufacturers lack working capital as banks turn off the tap. It can't go on like this. In his budget speech last week, Financial Secretary John Tsang Chun-wah offered some 280,000 smaller firms a new financing guarantee scheme to help them tide over the uncertainty arising from the euro-zone debt crisis. With a commitment of HK$100 billion in loans, the scheme increases the government's loan guarantee ratio to 80 per cent. In addition, Hong Kong Mortgage Corporation plans to roll out a microfinancing scheme, providing loans of up to HK$100 million with interest rates below market levels for poor start-up firms and the self-employed. In fact, there are some B2C and B2C e-business opportunities on the internet can be recommended to SMEs. IBUonline is a B2B platform, which offers foreign trade entrustment service to SMEs or start-up companies.