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Relaxed requirements for the $3.5 billion Loan Guarantee Scheme for Severe Acute Respiratory Syndrome impacted industries will take effect from Monday (June 16).
The relaxation will apply to all sectors under the Scheme, namely restaurants, hotels, retail businesses, travel agents, tourist coach operators, cinemas and karaoke establishments.
A Government spokesman said today (June 13) that the scheme requires a personal guarantee from the establishment's shareholder for each application. When the scheme was first introduced, a joint and several guarantee for the full amount of the loan was required from shareholders holding a total of 90 per cent or more equity interest in the business if there was more than one shareholder. Furthermore, the loans could only be used for payment of staff salaries.
"After the relaxation, the requirement of joint and several guarantee from shareholders will be reduced to 70 per cent equity interest."
"From Monday onwards, applicants can also use any funds remaining, after paying staff salaries direct to the employees, to meet other operating expenses, such as rent," he said.
For a loan approved on or before June 14, 2003, the borrower can now apply for an additional loan to meet operating expenses, if the loan approved has not yet reached the guarantee ceiling specified for that particular sector.
An applicant can apply for operating finance only if he has applied or is applying for wage finance. A sole proprietorship or partnership with no employees as evidenced by the applicant's Mandatory Provident Fund or provident fund contribution statement may apply for operating finance only.
The size of the loan will be capped at two times the sum of three months salaries and rent or the following specified guarantee ceiling for that particular sector, whichever is the lower:
* $1 million for restaurants and hotels (per business premises)
* $500,000 for travel agents and tourist coach operators (per business premises)
* $300,000 for retail businesses, cinemas and karaoke establishments (per business premises)
"In the case of self-owned business premises, rent will be taken as ratable value per month."
The application deadline is July 31. General enquiries may be directed to the Labour Department at 2717 1771. Information on the scheme, application forms and a list of the participating banks can be obtained at the websites of the Labour Department (www. info.gov.hk/labour) and the Hong Kong Association of Banks (www.hkab.org.hk). Application forms and details of the documentation required are obtainable at participating banks and their websites from next week onwards.
End/Friday, June 13, 2003
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