Hong Kong extends loan scheme to help SMEs weather crisis

HONG KONG, Oct 29 - Hong Kong said on Thursday it would extend a $12.8 billion loan guarantee scheme for small and medium-sized companies to help them weather the global financial crisis given the economic outlook remained uncertain.

The government said the scheme had been extended by six months until the end of June. Its loan guarantee commitment would remain at HK$100 billion ($12.8 billion).

"Considering that the economic outlook in the coming months is still uncertain, we consider it necessary to extend the special loan guarantee scheme for another six months to provide continued support for Hong Kong companies," a government spokesman said.

So far, 22,300 SMEs have applied to participate in the scheme, involving loans amounting to HK$53.5 billion, the government said.

Hong Kong pulled out of recession in the second quarter but recovery is expected to be slow as its trade sector is held back by weak global demand.

The government has spent HK$87.6 billion, equal to 5.2 percent of gross domestic product, on relief measures in the wake of the financial crisis.

They include help for lower-income families. The central bank, the Hong Kong Monetary Authority, has guaranteed bank deposits until late 2010.

The government says the loan guarantee scheme has stabilised over 10,000 companies and secured more than 240,000 jobs. (US$=HK$7.8) (Reporting by Susan Fenton, Editing by Neil Fullick)