Guarantees for Loans to Small and Medium Enterprises

Repayment of Kafalat Basic guaranteed loans

Fri, 04/12/2013 - 12:17 -- admin

Repayment of Kafalat Basic guaranteed loans

The loan has to be repaid within a maximum period of 7 years. New loan guarantees include a grace period of between 6 and 12 months depending on the expected business revenue. During the grace period, the borrower makes no repayment, neither principal nor interest.

Loan guarantee extensions and increases cannot benefit from an additional grace period. Kafalat Basic loan guarantees have a maximum duration of 7 years, starting from the date of the initial guarantee.

A borrower receives a loan guarantee of 200 million Lebanese Pounds on January 1, 2002. A couple of years later, the borrower wishes to expand the business which requires additional funding. The maximum additional Kafalat guarantee could be 100 million Lebanese Pounds, irrespective of how much of the loan has already been repaid. Similarly, the last repayment of the loan must take place on Dec. 31, 2009 or before.

Loan repayment is made by equal principal payments over the period of the loan. See examples.