Over half of loan interest subsidy quota still available

The SAR government’s SME Bank Loan Interest Subsidy Scheme, launched in mid-April, has so far received about 2,000 loan applications, with over 80% for new loans and the remainder for refinancing, according to lawmaker and Macau Association of Banks chairman Ip Sio Kai.

If all are approved, the loans would total more than MOP3 billion, leaving over half of the MOP10 billion quota available.

The scheme offers eligible business owners loans of up to MOP5 million, with a 4% annual interest subsidy for three years. It aims to help SMEs develop new businesses, ease financial burdens, and support restructuring.

Ip noted that early uptake was slow due to limited public understanding, but applications have increased following joint promotional efforts by the government, business sector, and banks, as cited in a Macao Daily News report.

More than 70% of applications so far have come from traditional industries such as catering, retail, wholesale, and construction, while the rest are from emerging sectors like health, high technology, culture, sports, and entertainment.

About 20% of applications involve refinancing existing debt, while the high proportion of new loan requests reflects confidence in business continuity and expansion.

The banker stressed that the scheme has been particularly valuable for industries facing structural challenges, such as competition from e-commerce and outbound spending, giving them time to explore new formats and business models.

Ip added that local banks will continue to promote the scheme, with a focus on reaching emerging industries, in hopes of stimulating broader participation and fostering diversification in the economy.

Banks pledge notto recall loans

Many companies in the region are undergoing transformation, while property prices and valuations have dropped amid changes in the economy and visitor market in recent years. This has raised concerns among property owners about the possibility of banks recalling loans.

However, Ip said the banking sector has a long-standing consensus against recalling loans solely due to falling property valuations.

He noted that last month, the Monetary Authority of Macau (AMCM) issued new guidelines to the industry, including procedures for handling declining valuations, to facilitate internal bank operations in line with regulatory and compliance requirements.

The lawmaker stressed that since the pandemic, banks and the wider community have worked together through challenging times, maintaining the stance that valuation drops alone will not trigger loan recalls.

In most problem cases, loan defaults stemmed from an inability to pay interest rather than valuation changes. Still, banks must adhere to risk management thresholds to meet regulatory requirements and safeguard depositors’ funds.

Ip said that an existing repayment plan is no longer viable, banks are encouraged to explore adjustments with clients, such as revising business strategies, liquidating assets, or increasing collateral, to arrive at workable solutions.