Borrowing while unemployed and jobless? Check out the eligibility to apply for the Unemployment Loan

Updated on 2022.04.22

Unemployment rate has surged to new highs as Hong Kong's economy is hit hard by the COVID-19 pandemic. In order to reduce the financial pressure of the unemployed and jobless, the HK government announced to launch the 100% Personal Loan Guarantee Scheme (Unemployment Loan) again to help them meet urgent financial needs. However, is every unemployed or jobless individual eligible to the loan? Before applying for the Unemployment Loan, it is necessary to understand its eligibility criteria and other related issues.

Eligibility and details of the Unemployment Loan
Note to self-employed individuals, freelancers, gig or casual workers
Financial options besides the Unemployment Loan

What are the eligibility criteria of the Unemployment Loan?

This new round of Unemployment Loan is better than before. People who have valid bank account(s) and are not subject to any bankruptcy petition or proceedings are eligible to apply. The maximum loan amount is 9 times the average monthly income of the applicant before unemployed or jobless, with the limit of HK$100,000. The annual percentage rate is only 1%, with maximum repayment period extended from 6 years to 10 years.

This time, the government has improved the flexibility of the Unemployment Loan to help those who are affected by the pandemic. Freelancers, gig or casual workers can also apply. However, applicants have to meet the following criteria:

• A Hong Kong permanent resident holding a valid Hong Kong identity card;
• Holding valid bank account(s) in Hong Kong;
• Showing unemployment proofs for at least 2 months at the time of loan application and proofs of previous employment for at least 3 months within the period between January 2020 and February 2022;
• Self-employed individuals, freelancers, part-time or causal workers also have to provide unemployment proofs to show the loss of main recurrent incomes.

Documents required:

• Copy of the Hong Kong Identity Card;
• Copy of the latest proof of residential address issued within 3 months;
• Documentary proofs of previous employment and main recurrent incomes for at least 3 months;
• A written declaration and proof of unemployment or joblessness and loss of main recurrent incomes (reference letter, bank statement or MPF statement showing the absence of salary income, etc.) for at least 2 months at the time of loan application

Note to Unemployment Loan applicants who receive salary in cash or are freelancers, part-time or casual workers

The pandemic has affected all industries, like transportation and logistics, construction, catering, fitness, beauty, travel and hotel, etc., many people were laid off and became unemployed. Though currently unemployed, they are not able to provide previous income proof because their salary was paid in cash. Therefore, they cannot provide the 3-month employment records for the specified period, nor can they show unemployment proofs for more than 2 months. As a result, they fail to meet the eligibility requirements to apply for the Unemployment Loan and eventually cannot be benefit from the government policy.

Some of the people who suffered great income loss during the pandemic would choose to become freelancers, part-time or casual workers during unemployment for the sake of paying the bills and supporting the family expenses. These temporary unemployed or jobless individuals may apply for the Unemployment Loan in times of financial needs, but can be deemed as ineligible for the scheme and their applications may need more time to approve or are simply rejected. Such individuals may consider small personal loans from different financial institutions.

How can the underemployed borrow money if they are ineligible to the Unemployment Loan?

As the pandemic is prolonged, many people become unemployed. Also, various business premises are forced to close, employees are required to take unpaid leave or work less, resulting in great income losses. Originally, this group of temporarily unemployed/underemployed individuals hopes to find relief from the Unemployment Loan, but oftentimes they are ineligible to apply and so unable to borrow the money to ease their heavy financial burden in times of urgent needs.

There are certain difficulties for the unemployed, jobless or underemployed to get a loan from banks or financial institutions, as they usually require the submission of employment proof and salary proof before approving a loan. The application and document submission procedures are complicated and the approval takes time, which can discourage the unemployed/jobless/underemployed applicants as they are not able to get the urgent money for immediate needs.

Fortunately, the Promise No-doc Loan is easy and simple to apply. There is no need to submit income proof, only ID card and mobile number are required^#. The maximum loan amount is $100,000, the same as the Unemployment Loan. Gig, part-time workers or underemployed individuals can consider Promise No-doc Loan if they fail to apply for the Unemployment Loan but still need to borrow money for urgent needs.

Details of Government Unemployment Loan shall be subject to government announcement.