3 Things You Should Know About Hong Kong’s SME Export Marketing Fundby Fintech News Hong Kong May 22, 2020
With businesses scrambling to recoup their losses due to the recent pandemic, digital e-commerce wasn’t left unscathed. Hong Kong’s small and medium-sized enterprises (SME), which rely on online marketing, mobile money, and government resources to sell products internationally, have had to rethink sales strategies.
Yet, that wouldn’t have been enough to keep businesses afloat if the government hadn’t introduced two measures to the SME export financing scheme.
- A 90% credit financing guarantee.
This means that loans of up to HK$6 million could receive extensions of as long as 5 years. Even if the business has been operating for less than a year. The guarantee also means companies don’t need audited financial statements to receive funding.
- Defer principal repayment for the first 12 months.
SME’s loan financing scheme has been optimized to allow businesses to defer principal loan repayment for the first 6 months. Companies also has the option to apply for an additional 6-month extension. Which puts the defered loan repayment period at 12 months.
Here are 3 other things about the SME export marketing fund every Hong Kong business owner needs to know:
1. The SME Export Marketing Fund Covers Online Digital Expenses
The goal of the SME export marketing fund (EMF) is to encourage businesses to expand operations to international markets.
Which means covering expenses for export promotion activities such as;
- Google and social media Ads (YouTube, Facebook…)
- E-commerce and company website development.
- Government virtual and on-site exhibitions and trade shows.
- Setting up or improving mobile applications.
Businesses can receive reimbursements on up to 50% of marketing costs. Which makes customer acquisition across borders affordable.
Applications for funding on digital expenses are only approved if the business can prove that the activity targeted international markets. For instance, if the firm runs a YouTube Ad, it needs to prove the campaign targeted markets outside of Hong Kong. Which is why the financing scheme has “export” in its name.
2. Global Businesses Registered In Hong Kong Can Also Apply
Global businesses registered in Hong Kong are also eligible to apply.
The grant sets forth a couple of caps:
- The company must have a physical office in Hong Kong.
- International businesses in the manufacturing sector must employ a maximum of 100 local residents.
- Non-manufacturing companies must have a maximum of 50 local residents.
What all this means is that if a business is based in Hong Kong, and it has local residents on the payroll, it must be targeting markets across the border. The small and medium-sized enterprise EMF can cover half the cost of its export promotion activities.
3. Hong Kong Businesses Can Send Unlimited Applications
Businesses have up to 60 days from the last invoice to apply for funding. Application forms are on the SME marketing fund page. The estimated processing time is 30 days. But due to the increasing number of applications, the process can take longer.
Requests for further documentation can delay approval by another 30 days.
Once approved, the enterprise receives a cheque in 4 weeks at their registered address. Companies are either reimbursed 50% of the total expenditure or $100,000, depending on which amount is less.
What Hong Kong businesses like most about the SME financing scheme is that enterprises aren’t limited to the number of applications sent. This works out great because every export promotion activity must have its own application.
But EMF funding is not unlimited.
Businesses receive financial support of up to a cumulative limit of $800,000. Companies can use up to 50% of the funds for setting up and developing a company (e-commerce) website as well as mobile applications.