Other Kafalat Plus loan guarantee conditions
• The borrower must commit to making a minimum contribution of 20% in personal equity, either in kind (subject to KAFALAT’s approval) or in cash towards the cost of the project;
• For SMEs expansion projects, the final debt/equity ratio should be at most 70/30, or equity should be not less than 30% of total outstanding liabilities;
• 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;
• In any case, cost incurred should not exceed 6 months prior to the loan application;
• Repayment of third party loans will not be considered eligible;
• The lending bank is not allowed to require from the borrower any collateral on top of the Kafalat loan guarantee.
Repayment of Kafalat Plus 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. In the grace period, the borrower makes no payment, neither principal nor interest.
Loan guarantee extensions and increases cannot benefit from an additional grace period. Kafalat 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.