Can I get a low interest loan if my business is not doing well? | Article – HSBC VisionGo

Today we have Kathy and Karen, two relationship managers at HSBC, here to share loan application cases they handled recently.

Finance  ·    ·  4 mins read

Many businesses often feel lost or helpless with loan applications due to the lengthy application process or their fear of being rejected by banks. With the recent economic downturn, businesses need loans more than ever but are stuck with key questions like whether 1) they are able to borrow loans at all and 2) if they can get affordable rates.  

Today we have Kathy and Karen, two relationship managers at HSBC, here to share loan application cases they handled recently and hopefully demystify business loan eligibility and application process so that businesses in need can secure financing to weather COVID-19.

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Q: Is it true that banks do not lend money to businesses that are not doing well?

Kathy: When a bank approves a loan, the applicant’s financial health is one of the many factors being assessed. While it is true that applicants in strong financial standing are more likely to be approved for a loan, we still have other loans to help support businesses being adversely affected by the current market conditions. We have a Special 100% Loan Guarantee (SFGS 100), back by the government, which is able to help businesses get back on their feet. 

 (It is eligible to those whose monthly sales turnover has declined by at least 30% in any month starting from February 2020, compared with the monthly average of any quarter in 2019. For more information on eligibility, please read Are you an eligible applicant for SFGS 100? )

Recently I assisted an applicant who’s in the medical equipment business. Ms. Chen previously applied for a business loan from another bank but with no success. When she heard of the Special 100% Loan Guarantee, she was unsure if it was worth applying as their business had yet to turn a profit since the previous loan application. Together with Ms. Chen, we went through the details of the Special 100% Loan Guarantee, as it is very different from other loan products in the market. Ms. Chen eventually filed the application and secured funding of HKD510,000. She was grateful that the money arrived in time to help turnaround her business.

(For loan amount estimation of the Special 100% Loan Guarantee, please read What is the SME Financing Guarantee Scheme –Special 100% Loan Guarantee

In short, even if your business is not doing well or your other business loan applications were rejected not long ago, you may still be eligible to the Special 100% Loan Guarantee.

Special-100%-Loan-Guarantee-application-bank-loan-low-interestKathy has been working in HSBC business banking for more than 3 years and recently has handled quite a few applications of the Special 100% Loan Guarantee.  

Q: The successful applicant above seems to have some financing experience. For companies with little or even no borrowing experience, would it take lots of time and efforts to file the application for the Special 100% Loan Guarantee?

Kathy: The application of the Special 100% Loan Guarantee is very standard comprising of application forms and standard supporting documents. Many of the supporting documents can be found readily on hand, like Business Registration Certificate, Mandatory Provident Fund (MPF) statements and bank statements. In fact, the Special 100% Loan Guarantee is one of the simplest business loans in terms of application.

(For detailed walk-through of the application process, please read A step by step guide to apply for the Special 100% Loan Guarantee)

Generally, we will work closely with our customers to handhold them through the application process ensuring that they know how to fill in the forms and understand the document checklist (whether they are experienced in the loan application process or not). For the customer I mentioned earlier, I was in close contact during the application process. Three weeks after the application, they were able to successfully draw down the money.

Karen: It is very true that first-time applicants shouldn’t be worried about the complexity of this application process. Many applicants I assisted found the process to be quite straightforward and manageable. Some of my applicants were even startups or small businesses with limited financial strength. 

Our teams have already processed lots of cases and I am happy to see that our loans were able to help so many companies weather these times. For some of them, the loan could mean the difference between being able to pay rent or wages to keep their businesses going. We understand that the loan can be critical for applicants’ survival and we help expedite the drawdown so that the money can be in their pockets as soon as possible.

As of mid-June, HSBC has received over 3,000 applications of the Special 100% Loan Guarantee, of which 1,000 cases are from first-time borrowers. Our taskforce of over 100 operational staff is dedicated to speed up the processing. Thus far, over 2,000 applications have been processed, representing close to 30% of total applications in the market.

An architect firm I assisted a while ago was unable to get paid by their customers. The knock-on effect was huge and significantly impacted this architect firm’s cash flow. This firm was new to HSBC and was suffering a liquidity crunch when I first talked to them in early April. I opened an HSBC bank account for the firm and thoroughly briefed them on the Special 100% Loan Guarantee before its first application day on 20 April, so that they can apply for the loan on the first day. This firm managed to secure a loan of HKD3.88 million within a week.【Need a bank account? From now to 31 January 2021, enjoy 15% off the account application fee if you successfully submit an account opening request online. Click here.】

Karen has been with HSBC for 2.5 years. She is assisting business customers in Kowloon East District. 

Q: What are the most asked questions about the Special 100% Loan Guarantee?

Kathy: It is definitely “how long does it take to get the loan approved”. After we receive all documents required from applicants, it takes generally one week to proceed the application.

Karen: Another frequently asked question is about interest rate. Many business loans in the market are based on HIBOR-rate and companies may have different lending rates depending on a range of factors. However, the Special 100% Loan Guarantee is rather simple and straightforward - a standard interest rate of the Prime Rate minus 2.5% per annum (i.e. currently such resulting interest rate is at 2.75%) will be charged.

We hope Kathy and Karen’s sharing helps you understand more about this newly launched business financing option. If you want to know more about the Special 100% Loan Guarantee, you may also read other related articles on HSBC VisionGo:

Reminder: "To borrow or not to borrow? Borrow only if you can repay!" 
HSBC reserves the final decision on application approval. Please refer the terms and conditions of the application form.