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Wednesday, June 28, 1972
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Loans will normally be for not less than HK$50,000 or more
than HK$250,000. Repayment periods will be from three to five years.
Normal repayment of principal and payment of interest will be
made in equal monthly instalments commencing within 90 days of the
installation of the machinery purchased with the loan.
Interest will be charged on the loans at the bank's prime lending
rate, currently seven per cent per annum, plus another two per cent.
The scheme was based on recommendations of the Loans for Small
Industry Committee of the Trade and Industry Advisory Board. It will be
administered by the newly created Loans for Small Industry Branch of the
Commerce and Industry Department.
Feasibility Studies
The total amount of loan capital required by the scheme will be
provided by the banks. The corner-stone principles are the acceptance by
Government of 50 per cent of the risk of every loan granted and the provision
to participating banks of detailed and unbiased feasibility studies conducted
by the Hong Kong Productivity Centre.
Mr. Porter added that all banks registered in Hong Kong can participate
in the scheme and their initial reaction has been favourable.
Maborating on the feasibility studies to be carried out by the
Productivity Centre, Mr. Porter explained that these were necessary because
the criteria for making these loans were somewhat outside normal banking
practice. Loans would be approved largely on the basis of assessments of
companies' technical capabilities and the feasibility of the projects for
which the loans were required.
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