What are the activities that are excluded from the guarantee scheme?
The following activities will not qualify for loan guarantees under the Kafalat guarantee scheme:
• Manufacturing or selling arms, weapon, or munitions;
• Activities that contributes to the violation of internationally recognized workers and human rights conventions or Lebanese labour laws;
• Any activity defined as illegal, or environmentally hazardous and dangerous for human
• All activities involved in the gambling industry;
• Activities involved in currency speculations;
• Security investments, or other type of financial assets;
• Activities in the real estate sector.
Other Kafalat Innovative loan guarantee conditions
• The borrower must commit to making a minimum contribution of 10% in personal equity towards the cost of the project;
• Loans may be only approved for the purchase, renovation or extension of premises, machinery and equipment, working capital and up to 15% of cost of professional fees and services related to the project;
• Project costs incurred before a loan guarantee application is made will not be taken into consideration, unless a prior written justification is given by the bank and approved by KAFALAT;
• Loan application may be presented simultaneously by the client to the commercial bank and to KAFALAT. KAFALAT is entitled to issue a guarantee certificate for the applicant;
• The lending bank is not allowed to require from the borrower any collateral on top of the Kafalat loan guarantee.
Repayment of Kafalat Innovative guaranteed loans
The loan has to be repaid within a maximum period of 5 years. New loan guarantees include a grace period of between 6 and 12 months depending on the expected business revenue. In the grace period, the borrower makes no payment, neither principal nor interest.
Loan repayment is made by equal principal payments over the period of the loan. See examples.