Saudi Central Bank extends guaranteed financing program for small businesses
The program encourages Saudi banks to loan to small businesses by guaranteeing a portion of the funds, and was launched in response to the coronavirus-related economic downturn in Saudi Arabia.
The Saudi Central Bank today announced an extension of its Guaranteed Financing Program for small and medium-sized businesses.
The Central Bank said the program will run for one more year until March 14, 2023. The Saudi financial sector and economy are still suffering from the effects of the COVID-19 pandemic, according to a statement.
The program is part of the Saudi initiative Kafalah (which means “guarantee” in Arabic) to help small and mid-sized businesses get loans from banks. The reasoning was that smaller enterprises may have difficulties providing sufficient guarantees for repayment to financial institutions. The program guarantees a portion of the funds banks grant to businesses. Kafalah is a partnership between the Saudi Ministry of Finance and private banks, according to the Riyadh-based Al Rajhi Bank.
To receive funding via the program, businesses' annual sales cannot exceed 30 million Saudi riyals ($8 million).
