Operation of Self-employment Business Start-up Assistance Scheme
Asked by : Dr. Hon David CHU
Replied by : SEM
Regarding the Self-employment Business Start-up Assistance Scheme launched in August this year, will the Government inform this Council:
- of the total number of loan applications received so far by the lending institutions participating in the Scheme, and the number of such applications which have been approved, together with a breakdown by the rate of interest charged on the loans; and
- whether the authorities concerned will study together with the lending institutions participating in the Scheme the possibility of exempting applicants from paying the handling fees?
|a.||As at 13 November 2001, there have been five applications since the launch of the Business Startup Assistance Scheme this September. Of these five applications, three have been approved, one has been rejected while another one is being considered by the lending institution. In the three approved cases, the loan amounts are all $100,000 and the respective loan terms, including the interest rates and repayment periods, are all within the limits of the Scheme, i.e., a maximum interest rate of prime rate plus 3% and a minimum repayment period of 24 months. Subject to meeting the conditions set out under the Scheme, the actual loan terms are business agreements negotiable between loan applicants and the lending institutions. The actual loan terms offered vary from one application to another.|
The Employees Retraining Board has written to 31 participating institutions to urge them to consider offering more attractive loan terms to applicants, including the offer of a reduced administration fee. Some participating lending institutions are consequently now willing to lower or even waive the administration fee taking into account the viability of individual business proposals. A considerable number of lending institutions have also indicated that, they will be ready to lower the interest rates to below prime rate plus 3% or even as low as prime rate plus 1%. With respect to the repayment period, most lending institutions are willing to offer a period of up to 36 months. Some lending institutions are willing to offer a six-month free repayment period or principal free repayment period. Relevant information is now available at the website of the Employees Retraining Board.