The Hong Kong Mortgage Corporation Limited (HKMC) held a signing ceremony for the SME Financing Guarantee Scheme on Monday, with a total of 21 banks expressing their interest in joining the scheme.

The HKMC announced that there will be a guarantee fee promotion for the first six months following the launch of the Scheme on Jan. 1, 2011.

Loans with tenor of one to three years will be granted a waiver of three months' guarantee fee, while loans with tenor of more than three years and up to five years will be granted a waiver of six months' guarantee fee, the HKMC said.

"The scheme offers extensive and flexible guarantee coverage to help small- and medium-sized enterprises (SMEs) in Hong Kong obtain more sustainable bank financing for their daily operations or to purchase equipment," said Norman Chan, Deputy Chairman of the HKMC.

"Scheme will also help banks manage their lending risks more effectively, since the banks can meet the financing needs of SMEs without having to warehouse excessive credit risks."