BDL incentives to finance startups

Banks more involved in entrepreneurial growth

A new circular issued by the Central Bank (BDL) introduced modifications to encourage the financing of startups, accelerators, and incubators through banks and financial institutions.

Banks wishing to finance such companies will benefit from interest-free BDL loans for a maximum period of seven years. “Through such new initiatives, the BDL seeks to encourage entrepreneurs to establish their own companies,” said Joe Baddour, Head of Corporate Banking Group at BLC Bank.

To qualify for these loans, a bank should own shares in the target company’s capital (not exceeding 80 percent) for the entire duration of the loan. The company should be a Lebanese joint stock company with nominal shares. Financial or offshore companies are excluded. The bank should cede all the shares it owns in the target company by the end of the maximum loan period (seven years), unless otherwise specified under specific conditions. The overall shares of any bank in a company» should not exceed three percent of its private money.

As an alternative, banks could invest in venture capitals designed for startups or accelerators.

The circular also stipulated that concerned banks should play an effective role in developing the company’s business, growth, and management.

“The purpose is to stimulate the establishment of new companies in Lebanon, create new job opportunities, and activate the financial market,” the BDL said.

reported by Leila Rahbani