Under the COVID-19 epidemic, social enterprises in Hong Kong had been severely affected and some of them were even undergoing operation crises due to insufficient cash flow. Below were the results of a survey conducted by the HKGCSE in late March on the recent difficulties social enterprises encountered on bank loans and specific suggestions regarding the situation.
We had collected 109 valid surveys, approximately ⅙ of the number of social enterprises in Hong Kong, while 80 of them were the members of our chamber. A large diversity of social enterprises responded to our surveys, their industry sectors included retail and catering (30%), service, education and training, healthcare, organic products and environmental industries (40%).
Under the epidemic, 90% of the social enterprises reported a loss in revenue from January to March this year, half of them still had serious deficits after their rent waivers. 80% of social enterprises had physical stores and over half of them were located in public organizations or in government properties. The remaining 40% rented private properties for their physical stores. Over half of the enterprises reported insufficient cash flow, while 25% of them would consider applying the “Special 100% Loan Guarantee” and other bank loans for their capital flows. Over 70% of enterprises could only afford a loan with an annual interest rate below 1%, only 20% of the social enterprises could afford a loan with an annual interest rate between 2-3%. Half of the social enterprises wished to get a loan of $500,000 or below for cash flow; 40% of them wished to get a loan of $2,000,000 or above for cash flow. At the same time, social enterprises reported difficulties when granting loans from banks, such as no guarantor (55%), social enterprises were not regarded as middle and small enterprises (50.5%). There were also limits regarding the uniqueness of social enterprises in the reinvestment of profits, as 45% of the social enterprises reported the challenge in granting loans due to the inability in providing profit records and the proof of loan repayment capacity.
With regards to the above situation, social enterprises hoped that the government could provide special measures to assist them in overcoming the circumstances under the current crisis, so we had the below suggestions for the government.
For enquiries on conducting interviews with social enterprises with bank financing needs, please contact our executive manager, Ms Candy Hui by email or phone call. We could arrange exclusive media interviews with these social enterprises.