Airstar Bank, a Hong Kong virtual bank targeting small businesses, is testing a loan scheme in the sandbox of the Hong Kong Monetary Authority. The bank is seeking more such companies to participate in its trial.
The bank’s research into the needs of small- and medium-sized enterprises suggests pain points in processes required for small companies to obtain loans.
Companies tell the bank they struggle with the length of time required, the paperwork, and the number of meetings required at a bank. This hampers’ companies’ ability to manage cashflows.
Airstar’s program, SME Easy Pay Loan, uses digital technology to streamline and hasten the entire process, says Ronald Iu, CEO. “We hope to simplify loan-application procedures by using fintech.”
For SMEs that transfer an outstanding instalment loan to Airstar Bank, they can enjoy a 24-month holiday on repaying the principal, and then borrow up to twice the original loan amount. This extra cash eases the need to direct all their financial resources to paying down existing debts, and increase cashflow.
The loan application process is entirely digital and takes about three working days to approve. Some conditions apply: SMEs need to have fewer than 50 employees and a three-year operating record in Hong Kong. But they do not need to provide financial statements or pay a service fee.
The bank is providing a rebate on loan interest for the first three months during the trial period. Qualified customers that repay on time during those early months will enjoy a full rebate of the first three month’s interest during the fourth month.
Interest on the loans is capped at 25 percent of the outstanding principal. Customers that withdraw extra cash can keep it with the bank on reserve, earning interest on it.