Corporate customers can further extend their trade facilities for another 90 days until the end of October, when the scheme will expire.
The HKMA (Hong Kong Monetary Authority) together with the Banking Sector SME Lending Coordination Mechanism has announced a further 90-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
The Banking Sector SME Lending Coordination Mechanism was established by the HKMA in October 2019. Participants include 11 banks that are most active in SME lending, along with the HKAB (Hong Kong Association of Banks) and HKMC Insurance.
Since the Pre-approved Principal Payment Holiday Scheme was introduced in May 2020, repayment deferment for trade facilities under the Scheme has been extended five times, for 90 days each time.
The HKMA notes that some trade loans will start to fall due in August this year. While external trade has continued to improve, and cash flow pressure faced by corporates has eased, the uncertainty around the pandemic situation warrants a further extension.
“The Mechanism therefore considers it appropriate to further extend the repayment period of trade facilities under the Scheme for 90 days until the end of October, when the whole Scheme will expire,” the HKMA said.
Under the Scheme, corporate customers can further extend for 90 days their trade facilities falling due between August and October this year. They can also apply for a 90-day extension of trade facilities drawn down from May to end-July this year.
For facilities which are self-liquidating in nature, banks may require the loan to be settled when the underlying payment has been received by the customer.
For trade loans that have been extended for 270 days or more cumulatively since the first drawn down, banks can adopt a “flexible approach” and consider on a case-by-case basis whether other forms of relief are more suitable.
Interested corporate customers may contact their banks, who will handle deferment requests on a “pre-approved” basis.
The HKMA will consult the banking industry on the way forward for the Scheme when it expires at end-October.