FINANCING YOUR BUSINESS
LOANS & OTHER FACILITIES
Low Interest Scheme from the Central Bank
Banque du Liban (BDL): As part of its efforts to secure adequate financing in the economy, the BDL has
issued circulars aiming at encouraging lending in Lebanese pounds at a lower cost, by setting new exemptions
from mandatory reserve requirements. Such credit incentives include loans to productive sectors (e.g.
Agriculture, Industry, Tourism, Information Technology, etc…), housing loans, high-educational loans and
environmentally friendly projects such as renewable energy, waste management, waste water treatment and
recycling.
1. New initiative by the Central Bank -2014
The Central Bank of Lebanon is now making investments in start-ups safe: It now provides incentives for
Lebanese Commercial Banks to directly invest in start-ups, funds, accelerators and incubators by
guaranteeing up to 75% of their investments in start-ups. The aim of this initiative is to help boost the
technology sector by providing it with much need financing. What does it mean for start-ups and VC funds?
More sources of financing available to them as commercial banks can now become direct equity partners in
their ventures. Bank Al Mawarid has already made a direct investment in one start-up and Bank Audi and
Bank Med will soon follow suit. 400 Million USD have been allocated to support start-ups. For more
information on the this initiative please refer to Circular 331.
2. Medium and long range loans for productive sectors
Beneficiaries: Individuals and institutions in the private sector involved in tourist development, agricultural,
industrial or artisanal activities, as well as private sector companies that manufacture technological devices,
programs, and specialized technologies, in addition to undertaking services linked to the previous devices,
programs and technologies.
a. For Subsidized Loans:
Loan's Currency
Maximum Cost Implicated on the Beneficiary*
LBP
Interest on Treasury Bonds for 2 years + 1%
USD
Average Libor for 3 Months + 7%
Euro
Average Euro Libor for 3 Months + 7%
*including interests and commissions prior to the introduction of state support
Conditions:
 The money should be invested in Lebanon to fund a new project or to continue an ongoing one. With
the exception of :
o Financing the purchase of land
o Financing the purchase of ready-to-use buildings, while only 50% of the value of buildings
under construction can be financed by this loan, keeping on condition that the property’s
price does not exceed the 50% of the subsidized loan.
o Financing the different means of transportation, while it is possible to support concrete
pumps by 90%, mixing concrete pumps by 60%, and the cryogenic transportation cars by 60%
from its total value.
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o Subsidizing working capital
o Subsidizing the purchase of stocks or company shares
The loan’s duration must range between 5 and 7 years and must exceed 15% of the loan’s value in
the first 2 years.
The loan’s value must not be less than 50 million Lebanese Liras or its equivalent in USD or Euro.
Loans’ balances of one institution or one economic group that benefit from the subsidized loan,
should not exceed the value of LBP 15 billion or its equivalent in USD or Euro, or LBP 60 billion or its
equivalent in USD or Euro in the case that BDL’s central council agrees to make an exception for
economic or financial reasons.
Specifying the value of the subsidies of the interest in the following form:
o 7% on the first LBP 5 billion or its equivalent in USD or Euro.
o 5% between LBP 5 billion and LBP 15 billion or its equivalent in USD or Euros for every
individual/institution or economic group.
BDL applies an average interest rate on loans granted to one institution or economic group, when the
total value of the loans exceeds LBP 5 billion or its equivalent in USD OR Euro.
b. For Unsubsidized Loans:
Loan's Currency
Maximum Cost Implicated on the Beneficiary*
LBP
85% from Treasury Bonds' returns for 1 year + 3%
USD or Euro
Cost of Funds + 2%
*including all interests and commissions
3. Agricultural Loan
Agricultural loans are offered based on the protocol of cooperation signed between banks and the Ministry
of Agriculture.
Loan's Currency
Maximum Cost Implicated on the Beneficiary*
LBP
5%
*including interests and commissions prior to the introduction of state support
Conditions:
 Conditions of the protocol signed between banks and the Ministry of Agriculture
 Minimum limit for subsidies: LBP 3 million
 Maximum limit for subsidies: LBP 25 million
 Subsidies’ period: ranges between 3 and 48 months with a 6-month grace period
4. Financed loans or guaranteed loans from the institutions and funds
 IFC (International Finance Corporation)
 EIB (European Investment Bank)
 OPIC (Overseas Private Investment Corporation)
 AFD (Agence Fran¢aise de Development)
 AFESD ( Arab Fund for Economic and Social development)
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The agreements’ conditions are signed with the related banks, whether the loan is in LBP, USD or Euro, in
addition to the conditions of the signed agreements for subsidized loans that are imposed by the BDL.
5. Environmental Loan
Environmental loans are granted to finance new eco -friendly projects, whose goal are to preserve the
environment, or are offered to develop old projects so that they become sustainable.
a. For Subsidized Loans:
Loan's Currency
Maximum Cost Implicated on the Beneficiary*
LBP
Interest on Treasury Bonds' returns for 2 years
USD or Euro
Average Libor for 3 months + 6%
*including interests and commissions prior to the introduction of state support
Conditions:
 Loans must be granted to fund productive eco-friendly projects
 The concerned bank’s responsibility is to be aware of the purpose of the loan and to ensure the
applied environmental rules comply with the documented applied standards.
 Loans must not be granted and ensured by KAFALAT s.a.l.
+ BDL’s conditions applied on the loans subsidized by the government
b. For Unsubsidized Loans:
Loan's Currency
Maximum Cost Implicated on the Beneficiary*
LBP
3%
USD or Euro
Cost of funds + 2%
*including interests and commissions
Conditions:
 Loans must be granted to finance projects that are eco-friendly and whose purpose is to preserve the
environment, or develop old projects so that they become sustainable such as: Renewable Energy
projects, Ecotourism, and Recycling.
 The concerned bank’s responsibility is to be aware of the purpose of the loan and to ensure the
applied environmental rules comply with the documented applied standards.
 Reimbursement period must not exceed 10 years after the termination of the grace period.
 Loans must be granted a grace period of no less than 6 months and no more than 2 years starting
from date of granting the loan.
6. Housing loans to emigrants
Such loans are based on the cooperation protocol signed between banks and the Ministry of Foreign Affairs
and Emigrants. These loans are in Lebanese pounds LBP and enjoy a very low interest rate of 1.628%.
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7. Microcredits:
Granted from microcredit institutions, financial institutions or from banks, using the agreement of
“microcredit institutions”.
Conditions:
 The loan must be granted to small institutions that are comprised of 4 individuals or less involved in
industrial, agricultural, craft, services, tourism or commerce activities
 The maximum value of the loan is LBP 10 million
 The period of repaying the loan must not exceed 3 years
8. Educational Loans:
Granted for the purpose of continuing education in higher education institutions (Academic-technicalvocational) in Lebanon and abroad. Educational loans also include ones which are granted to pay off tuition
fees of students who have finished their degrees at the institutions of higher education. These are
unsubsidized loans with a maximum interest rate of 3%, including all benefits and commissions.
Conditions:
 Repayment of the loan must begin 1 year after date of graduation
 Period of repayment of the loan must not exceed 10 years from date of the 1st payment
For more information on these facilities, refer to www.bdl.gov.lb
Commercial Bank Loans
Banks are the major providers of credit to businesses. Loans to the private sector have continuously been on
an upward trend even during periods of economic downturns. Corporate loans account for the largest share
(44.7%) of loans provided by commercial banks, while SME lending (15.6%) and retail loans (14.8%) come
next. Doubtful loans continue to be provisioned at 89%, one of the soundest levels in the region. While
receiving loans from Lebanese banks, national and foreign investors will benefit from:
» highly competitive interest rates
» flexible payment terms
» credit incentives to specific sectors
Kafalat Funding Scheme
Kafalat is a loan guarantee company, established by the Lebanese government in 1999 to support the
activity of small and medium sized enterprises (SMEs). Kafalat provides financial guarantees for loans
granted by commercial banks to SMEs engaged in the following economic sectors: Industry, Agriculture,
Tourism, Traditional Crafts, and High Technology.
Kafalat currently offers three distinct types of loan guarantees:
» Kafalat Basic, a loan value with a ceiling of LBP 300 million (approx. USD 200,000). This scheme
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guarantees 75% of the value of the loan granted by the bank and the accrued interest during the
grace period plus three months.
» Kafalat Plus, a loan value with a ceiling of LBP 600 million (approx. USD 400,000). This scheme
guarantees 85% of the value of the loan granted by the bank and the accrued interest during the
grace period plus three months.
» Kafalat Innovative, a loan value with a ceiling of LBP 300 million (approx. USD 200,000). This
scheme is set up to specifically support innovative start-ups i.e. start-ups which demonstrate the
potential to create significant commercial added-value through innovation. It guarantees 90% of the
value of the loan granted by the bank and the accrued interest during the grace period plus three
months
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Lending is undertaken trough commercial banks
Eligible SMEs benefit from an interest rate subsidy, paying 7% per year
Loans can be repaid over seven years including the grace period.
Loans can cover the entire range of capital requirements (purchase of raw materials and spare
parts; working capital; construction of premises; and purchase of machinery and equipment).
For more information on Kafalat Scheme, please refer to www.kafalat.com.lb
Venture Capital Funds
The Lebanese financial sector has witnessed the recent surge of Venture Capital Funds (VCF) which provide
entrepreneurs and investors with seed capital. Examples of these funds include: The Carlyle Group; Berytech
Fund; The Building Block Equity Fund; Middle East Venture Partner; Cedrus Ventures; and many others.
ISME Fund by The World Bank and Kafalat - 2013
The World Bank has established a SME fund with a capital of USD 30 million in order to support innovation
in Lebanese SMEs. The fund , through Kafalat, will finance seed and early growth companies by providing
them with equity investments. In order to qualify for these investments, SMEs need to secure matching
funds from a private sector investor. The ISME will target companies in all sectors and in three categories of
risk: USD 25,000 to 200,000 for seed capital loans, USD 200,000 to 500,000 for venture capital loans and
USD 500,000 to 2 million for growth capital loans.
FARO Lebanon Fund - 2013
FARO is a seed capital, development and orientation fund aimed at supporting small and medium sized
enterprises in Lebanon. It is an initiative by the French government , based at and chaired by the Beirut and
Mount Lebanon Chamber of Commerce , Industry and Agriculture (CCIB). The fund has an initial budget of
USD 500,000 and will finance up to USD 20,000 per eligible SME. In order to qualify for the financial support,
companies need to provide an innovative product or service and have at least one partner from a European
or Mediterranean country. The fund is expected to receive a grant from the European Union worth 1 million
euros in 2013.
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IDAL Incentives Scheme
IDAL grants a set of incentives for investments in key sectors including: Industry, Agriculture, Agro-Industry,
Tourism, Information Technology, Technology, Telecommunication, and Media. Two incentives schemes are
available:
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Investment Project by Zone (IPZ) scheme: It is a scheme based on the project’s geographical
location, investment size and sector type. It provides investors with fiscal related incentives and
work permits. This scheme divides Lebanon into three geographical zones (Zone A, Zone B, Zone C).
 Package Deal Contract (PDC) scheme: It is a scheme based on the project’s investment size, number
of jobs created, and sector type. It provides investors with fiscal and labor related incentives as well
as set-up fees reductions.
For more information check the Investment Incentives booklet on our website.
Business Incubators
Several business incubators have been established with the aim of fostering Lebanon’s economic
development, attracting high value investments, and creating new jobs. These successful initiatives have
been accommodating new start-ups, supporting SMEs and the launch of entrepreneurial projects through
facilitating access to capital, expertise and creating networking opportunities.
Today around 7 incubators across Lebanon provide training, consultative , technical and financial assistance
to new and existing businesses:
Berytech: Located in Mkalles – Beriut suburbs, Berytech is the first technology pole in
Lebanon. Berytech provides business incubation and acceleration services for
technology start-ups, and hosting facilities for already established SMEs. Incubated
companies can also benefit from the Berytech Fund which makes venture capital and
equity-related investments in ICT and Technology companies. Berytech is a member of
the Network of European techno-parks www.berytech.org
South Business Innovation Center (South BIC): Located in Sidon with two
outreach locations in Tyre and Nabatieh, SouthBIC offers office space and business
support services. It provides mentoring, marketing and financial training as well as
exhibition facilities for companies established in Sidon and the South of Lebanon,
across all sectors. SouthBIC is funded by the EU delegation in Lebanon.
www.southbic.org
Business Incubator Association in Tripoli (BIAT): Located in Tripoli, BIAT
consolidates incubation services in Northern Lebanon. It provides hosting facilities,
business consulting, legal assistance, financing, marketing and export guidance for
companies established in the North of Lebanon. BIAT is also funded by the EU
delegation in Lebanon. www.biatcenter.org
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Seeqence: Located in Hamra-Beirut, Seeqnce is a startup accelerator which helps
building and accelerating startups with regional or global potential in internet and
mobile technology. Seeqnce mentors startups for a period of 6 months and gives
companies access to office space, linkages with potential partners and high levels of
media attention. Seeqnce is a private initiative.www.seeqnce.com
Altcity: Located in Hamra-Beirut, Altcity is a startup space for technology, media and
creative industries. It hosts individual entrepreneurs or startup companies and provide
them with a series of workshops, networking events and mentoring opportunities, in
the objective of fostering Lebanon’s entrepreneurial ecosystem and talent. AltCity is a
private initiative.. www.altcity.me
Beirut Digital District: Located in the Bachoura district at the heart of Beirut, the BDD
aims at building and developing technology clusters and linkages in Lebanon. By 2015,
the zone will comprise of 4 buildings with an area of 15000 square meters. The space is
designed to host local as well as foreign ICT companies and to provide them with state
of the art facilities, including access to advanced IT services and fiber optics
infrastructure at reduced rates. The BDD is a Public Private Partnership (PPP) led by the
Ministry of Telecommunications in collaboration with ZRE and Berytech.
Cloud 5: Located in down town Beirut, Cloud 5 is a new incubation and acceleration
space for startups and entrepreneurs in ICT . Companies operating in Cloud 5 benefit
from free fiber optic broadband services in addition to reduced rental rates which go up
to 300$ per person per month. A mentorship program will be soon put in place to
support the successful development of entrepreneurial companies . Cloud 5 is
developed by Solidere and operated by Wamda.
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