Financing for Entrepreneurs in Lebanon
While the women entrepreneurs are hard at work on developing their business plans in their one-on-one coaching sessions at the BIAT center, we are getting ready to face one of the biggest challenges that entrepreneurs encounter on their long road to success...access to financing!
The Lebanese system offers 4 main loan categories available to small-businesses and start-ups.
- Microfinance
- Subsidized Loans
- Equity Finance
- Leasing
The participants of our WEL project and many other entrepreneurs from underprivileged backgrounds find themselves with two real choices to access financing:
- Microfinance: This type of loans refers to the provision of small financial loans, usually below $20,000USD to low-income or self-employed clients.
- Subsidized: This type of loan has little or no interest for the borrower. Interest is normally charged periodically according to an annual percentage rate, but in this case, another party, usually the Central Bank of Lebanon, pays the loan interest.
One of the most well known institutions for subsidized loans in Lebanon and the organization that will assist with some of the women in our WEL project is Kafalat. General Manager and Founder of Kafalat, Dr. Khater Abi Habib started this financial company with a concern for the public interest in mind. The organization assists small and medium sized enterprises (SMEs) in accessing funding from commercial banks. Their assistance comes in the form of providing loan guarantees, on a case-by-case basis for entrepreneurs and start-ups that may not be able to adequately meet the loan requirements on their own.
As a traditional subsidized loan, there is no interest on a Kafalat loan, making it a very attractive option for our ladies, many of whom can’t engage in traditional loans, as interest is known to be against the traditions of Islam. TYO women entrepreneurs will benefit from such resources as Kafalat as they face the challenge of funding their business ideas, moving forward and we are happy that such options are available to them!
More detailed information on Kafalat and its services can be found on their website.
--Nadine
Nadine is the TYO Program Manager of Women Entrepreneurs in Lebanon Project based in Beirut.