The International Finance Corporation, a World Bank unit, has recognised Hong Kong’s small and medium-sized enterprises (SMEs) as engines of growth by investing HK$155 million (US$20 million) in a Hong Kong specialty finance company to help expand its innovative business model in the Asia-Pacific region.

SMEloan (Asia), the brainchild of Hong Kong businessman Ming Siu, aims to break the lending squeeze on SMEs by using the Internet to assess the merits of businesses. This high-tech approach discards the financial statements which banks and investment capital institutions rely on in favour of “real time” monitoring of business sales, cash flow and business partners.

The chairman and chief executive, Mr Siu, said: “Hong Kong is the world’s third most densely populated city for SMEs which shows the potential for this kind of service. SMEs are a major force in Hong Kong’s market-driven economy. They are popular because people in Hong Kong want to own something for themselves and they are very entrepreneurial.”

Mr Siu believes the IFC investment is vital for the project’s success. “The IFC identified SMEs as a key focus for wealth creation and they realised one of the main areas was finance. They have been working with the intermediaries and companies who provide capital for SMEs.

“With this IFC endorsement we can now extend beyond Hong Kong to the Asia-Pacific region and eventually become a global business,” he said. Rather than focus on smaller sums, SMEloan provides loans ranging from HK$390,000 – HK$5.5 million (US$50,000 - $700,000). Mr Siu believes this contrasts with the usual small sums to which banks restrict SMEs.

IFC director for East Asia and the Pacific Javed Hamid noted: “This project represents a strategic investment for IFC which recognises the critical importance of SMEs. We look forward to helping SMEloan extend its innovative approach to financing by assisting small businesses around the world.”

SMEloan believes that its proprietary web-driven loan processing and monitoring system is a product in its own right. “One of the key areas for growth at SMEloan is that we want to set up a new technology company that allows us to provide software for the financial institutions so they can use our systems,” Mr Siu said.

The company already lists several hundred clients including watch manufacturers, garment companies, e-commerce firms, logistics operators and printing operations. Hong Kong has more than 290,000 SMEs which account for 98 per cent of businesses and employ about 60 per cent of the workforce, according to the Hong Kong Government’s SME Information Centre.