Cost of the Loan

Interest Rates

Kafalat Basic guaranteed loans may be granted in either Lebanese Pounds or US Dollars, or any other convertible foreign currency.

Loans taken in Lebanese Pounds (LBP) will be charged the following interest rate:

Interest rate = 1-year Lebanese Treasury Bills Yield (TBY’s) + 3%

Loans taken in Foreign Currency (e.g. USD) will be charged the following interest rate:

Interest Rate = 1 year Libor + 5.5% + 7.5% of FFR (Upper limit of the Federal Fund Rate)

Subsidy

The interest subsidy is the same for all subsidized loans, currently at 4.5%. The duration of the subsidy is maximum 7 years.

Kafalat Fee

The Kafalat fee consists of a 2.5% yearly commission of the outstanding value of the guarantee. The value of the guarantee is 75% of the loan value approved by the bank and Kafalat.

Fiscal stamps are charged once on the Letter of Guarantee and are calculated at 0.4% of the value of the guarantee.

Therefore, the final cost at Letter of Guarantee issuance would be equal to:

[(Loan Value + interest accrued during grace period + interest accrued for 3 months) x 75% x 2.5%] + [(Loan Value + interest accrued during grace period + interest accrued for 3 months) x 75% x 0.4%]

Additional Fees

A one time file fee may be charged by the bank (Maximum 400,000 Lebanese Pounds).