Kafalat Loans, Overview and Evolution
Kafalat is a Lebanese financial institution with a public concern, serving the Lebanese economy since 2000. It helps Start-ups and SMEs get commercial bank lending while providing guarantees to the bank, supported by a feasibility study showing the profitability of the project.
Eligible Sectors: Industry, Tourism, Agriculture, Technology, and traditional Crafts.
Kafalat Loans benefit from Interest rate subsidy provided by the Central Bank of Lebanon. Interest is set for 40% one year Treasury Bills + 3%, currently 5.15%, in addition to a 2.5% yearly commission (charged by Kafalat) on the amount of guarantee which is 75 to 90% of the Loan Amount.
Currently 6 different type of Kafalat Loans are available; Kafalat Basic, Kafalat Plus, Kafalat Innovative, Start-ups and Innovation, Kafalat Agriculture, Kafalat Energy.
In addition to Kafalat iSME; Equity investment initiative funded by the Lebanese Government and the World Bank.
Over the past ten years, Kafalat Loans has been witnessing an evolution in number and amounts, which is directly correlated with the Lebanese economy situation. The economic downturn has not affected all sectors to the same amplitude; the hospitality tourism sector is always the most to be affected.
The two below charts shows the evolution in number and amount over the past 10 years:
A considerable decrease of granted Kafalat Loans is witnesses since the year 2011, mainly because of the Syrian Crisis and its direct effects on the Lebanese economy. The Year 2016 showed a slight increase (compared to 2015), hoping that the trend will continue to increase, with the current relative stability of the situation, due to the election of a new President and the start of the resolution of the Syrian crisis.