Kafalat loans down

SMEs funding drops in number and value

The number of subsidized loans to small- and medium-sized enterprises went down in 2012. Loans benefiting from Kafalat guarantee fell by 20 percent on an annual basis to 1,025. Their aggregate value declined by 16 percent to $136.6 million, while the average loan amount rose by three percent to $133,270.

Kafalat-guaranteed loans benefit from a subsidized interest rate, supported by the Central Bank (BDL). Ahmad Radi, chief risk officer at Fransabank, said the drop in Kafalat loans could be attributed to three main factors: “Lower supply from Kafalat due to a shortage in its financial resources, lower lending from banks which have less liquidity due to their sizeable investments in government bonds, or lower demand for credit from SMEs.”

The bulk of guarantees went to projects related to agriculture (38.7 percent) and industry (38.2 percent), followed by tourism enterprises (17.3 percent). Projects related to handicrafts and specialized technologies received the least guarantees, with 4.5 percent and 1.3 percent respectively.

In terms of geographic distribution, SMEs in Mount Lebanon received 41 percent of the guaranteed loans, followed by those in the South with 22 percent. SMEs located in the Bekaa and the North received 17.5 percent and 13.5 percent of these loans respectively, with Beirut accounting for the remaining six percent.