• "Kafala": The loans applications of small and medium enterprises rise 3 times during the Corona crisis


    ​​In a direct meeting held Thursday:

    "Kafala": The loans​​ applications of small and medium enterprises rise 3 times during the Corona crisis​

    ​The Director-General of the Kafala Program of the General Authority for Small and Medium Enterprises / Hammam Hashem noted that the Saudi Arabian Monetary Agency (Sama) has become responsible for the percentage charged by the program from the establishments as a result of guaranteeing its loans from banks and financing agencies, for the period from the fourteenth of last March Until the end of this year, and you have to mitigate the effects of the Corona crisis​ on the small and medium enterprise​.

    This came during the meeting organized by the Asharqia Chamber in cooperation with the Information and Awareness Committee in Saudi Banks, which was held on Thursday (4/23/2020) and moderated by the Secretary-General of the Committee, Talaat Hafez, where Hammam indicated that the program continues to support it directly through the program of funding guarantees support and the deferral payments program. Supported by the Saudi Arabian Monetary Agency for small and medium enterprises by postponing payments for a period of 6 months to the institutions that received financing during the period from March 14 to the end of 2020 and exempting the facilities from the sponsorship program fees.​

    He said that the Kafala contracts to which the program is committed to guaranteeing 80% to 90% of them for the benefit of banks and financing agencies have increased since March 14 by nearly 3 times, despite the challenges of the situation caused by the krona pandemic that enables the client and the financing agency to communicate.​​

    ​He added that the number of establishments benefiting from the guarantees of the program reached 2258 establishments in 2019, by issuing approximately 4,000 guarantees worth more than 4.8 billion, while the value of financing for the projects of these establishments amounted to 7.3 billion riyals, indicating that the program since 2018 - 2019 raised The ratio of guaranteed debts to the total loans issued in favor of small and medium enterprises from the financing agencies from 4.8% to 9.1%​.

    He suggested that the Kafala program aims to provide financial guarantees to enhance the access of the small and medium enterprises to the necessary financing through strategic partnerships through innovative tools supported by the rules of the program, noting that the program aims to provide bank guarantees with the financing agencies as soon as possible, explaining that the program is not for profit and aims For sustainability through preserving capital and reducing risks, pointing to the program moving to develop the human capital working in it through the existing knowledge and databases, following the latest technologies.​

    ​He stated that the program’s age is 14 years, as it was established with a contribution between the Ministry of Finance and Saudi banks with a capital of 200 million riyals distributed equally between the two parties with the aim of supporting small and medium enterprises, indicating that the program has worked since its establishment under the management of the Industrial Development Fund in 2006, pointing out that The program since 2006-2015 within the limits of 200 million riyals and has only one product that covers up to 1.6 million riyals, but with the launch of the Kingdom’s vision the program’s capital has been supported to reach 1.6 billion riyals and with the contribution of several government agencies, for this, the program launched several new products that helped in Supporting small and medium enterprises.​

    ​He pointed out that December 2019, the high order was issued to establish a program to guarantee financing under the supervision of the General Authority for Small and Medium Enterprises, "establishments", which enhances the complementary roles to support and empower the small and medium enterprises sector, which will increase the volume of its activity, and the total loans that guarantee it will increase from 1.5 billion In 2012, it reached 7.3 billion in 2019, while it provided guarantees worth 4.8 billion riyals in 2019, benefiting 2480 small and medium enterprises, achieving a growth rate of 80%.​

    ​Based on these data - according to Hashem - the program provided guarantees for about 29,000 establishments during 14 years, while the total value of the guarantees amounted to 4 billion riyals, and the guarantees issued were 16 billion riyals, indicating that the most beneficiaries are the Riyadh region, then the eastern region, followed by the Mecca region Al-Mukarramah, while other regions started to register remarkable growth​.

    ​He stated that the most prominent activities that benefit from the guarantee service of the program are "retail trade, construction and maintenance, manufacturing industries and service activities", indicating that the percentage of durability or guarantee that the program bears is 80% for traditional activities, this percentage rises to 90% if it is The activity is distinctive: "tourism, supply chains, franchisees, communications, and information.​

    ​He pointed out that the value of coverage for small and medium enterprises amounts to 2.5 million riyals (coverage is the value of the guarantee and not the value of the loan) and the value of coverage for medium enterprises reach 15 million riyals, noting that the program receives 1.5% wages for issuing guarantees in the usual cases and in promising areas and facilities Businesswomen or one of the targeted sectors, for example (tourism), the percentage drops to 1%. Note that these percentages are borne by the end of the year through the financing guarantees support program supported by the Saudi Arabian Monetary Agency​.​

    And on the mechanism of obtaining the guarantee from the sponsorship program, it was made clear that the owner can communicate directly with the bank or the financing agency, which in turn submits the application to the program, or registration through the "finance portal" on the website of the General Authority for Small and Medium Enterprises, which facilitated the process in front of the facilities, and opened The field of obtaining the best financing offers, and a sponsorship program that studies the requests received, and the decision is not taken by an individual but rather through a credit committee that operates according to certain professional standards, including that the project be officially documented with a valid commercial record, and that the funding to support the project is not For speculation in any Another area, and that funding will be used in favor of the core activity as well as other criteria such as Saudization and the field of activity, and profitability is one of the criteria (out of 13 criteria), and not everything is in providing security. In conclusion, Hammam stressed that the program continues to support small and medium enterprises to overcome this crisis.


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