Business Financing

Business Financing (5)

How to finance your business?

Are you a business owner looking to expand your enterprise, or simply an entrepreneur with an idea? Do you have a business plan you are looking to finance? There are several methods to fund your venture. A viable way is to apply for a business loan from a bank.

Banks in Lebanon offer a variety of loans to independent professionals and small businesses, which are not only vital to the national economy but are the essence and life of each and every neighborhood. New ventures equate to job creation, etc. A solid and innovative idea could get you the proper financing.

To go from an idea to a solid proposal you can present to a local bank, the road can be long. First of all, you need to create a business financial forecast and conduct a feasibility study for your business. Not an easy task. Bnooki.com can guide you with these steps.

To sort out the different credit offers from Lebanese bank and compare loan characteristics you can consult bnooki.com. Below is a list of composed characteristics.

  • The minimum and maximum loan amount you can apply for

  • The long term repayment periods

  • Flexible financial methods

  • Low interest rate

  • The required guarantees

  • The Grace period

  • The eligibility of the business model

  • Compulsory insurances: Life insurance, etc.

  • Fees and commissions

We will help you weigh in the different options that will allow you to settle for the best choice.

Itemized below is a list of required documents that you are required to provide.

  • Official documentation: audited financial statements for the last two years

  • Financial projections for the period of the business loan: business plan or feasibility studies showing the viability of the proposed business activity, business projection, cash flow

  • Life and fire insurance policies

  • List of fixed assets and owned properties

  • Banking references and Commercial references

  • ID and Legal papers


On one hand, it is not an easy task to come up with all the necessary plans, and studies. On the other hand, selecting the appropriate loan to finance your business can be taxing. Bnooki’s team of experts is available to assist and help you with your business plan, feasibility study, and financial projections. Visit bnooki.com to find and compare Business loans offered by banks in Lebanon

Friday, 30 January 2015 Written by

Venture Capital in Lebanon: Pros & Cons

Picture this – you’re a young Lebanese entrepreneur with big ideas and big dreams but one small problem… no cash. You’ve probably heard the term ‘venture capital’ floating around but you’re not really sure how it can help you. Let’s take a look.

Venture: noun. ‘A risky or daring journey or undertaking’. Capital: noun. ‘Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing’ (Google). Put these 2 words together and you have money and/or expertise provided by investors willing to bet that you, as a new Lebanese entrepreneur, will turn their money into profit.

A venture capital firm is created when a group of smart investors pool their knowledge and resources and come together to form a new firm. They get their funds from wealthy individuals who are willing to take a high risk on the premise that they stand to gain much more.

Once the funds have been raised, the new business is expected to make good use of them swiftly to produce spectacular returns. Because of this, venture capitals tend to be more interested in sectors of the economy that yield quick returns, like technology and healthcare.

Sounds too good to be true? Read the following carefully – you’re not just getting a free ride. Venture capital funds can come at a heavy price; the most unattractive being the fact that you will likely have to give a large percentage of equity to the venture capital firm.



Pros

Cons

  • You have access to a much larger amount of money than you could ever hope to secure from other sources.

  • Unlike a bank loan, there’s no fixed repayment schedule.

  • You’ll benefit from expertise as well as cash.

  • You can share some of the risks involved in setting up a business.

  • You will have to surrender a portion of your shares to the investors.

  • Likewise, managerial control over your business will not just be yours alone.

  • Any profits made have to be shared out.

  • The stakes are high and the pressure is on to succeed.

 

The Lebanese market is notoriously difficult to crack and so as a Lebanese entrepreneur, you really need local expertise. In Lebanon, there were 2 main venture capital firms that focus on Lebanese business: The Berytech Fund and the Middle East Venture Partners (MEVP) in 2014. However the market is about to drastically expand with several new funds to be launched in 2015 following Central Bank of Lebanon’s circular # 331 which increased the liquidity available to venture capital funds via the cash rich commercial banks.


If you are looking for venture capital funding, you came to the right place; Bnooki was selected by the Central Bank of lebanon as a main platform through which you can apply online. For more information on venture capital and advice on funding your business, visit http://www.bnooki.com/business-financing/venture-capital.

Saturday, 13 December 2014 Written by

Business Loans and Financing options for Entrepreneurs in Lebanon

As money gets tighter, minds get more creative. This week, Global Entrepreneurship Week Lebanon has brought together Lebanon’s brightest entrepreneurs and startups with those who have the means to fund them to listen, discuss, network and compete. The enduring struggle to find funding means that the choices for startups are ever evolving. Here on Bnooki we have brought together a list of funding options from Lebanese banks and others, especially tailored for Lebanese entrepreneurs.

1. Loans

If you can satisfy their conditions, loans can be a handy way to inject some cash into your business.

BCL Loans

The Lebanese bank BLC has a range of products tailor-made for Lebanese startups and SMEs (small and medium-sized enterprises) in any sector of the economy. These include:

  • ESFD-Micro credits program

  • Koudourat range of products

  • Kafalat Loans

  • Term Loans in collaboration with BDL

  • Eco Friend Loans 

  • Collateral Free loans

The benefits of these loans include:

  • Attractive interest rates as low as 0% on Kafalat loans

  • Competitive fees and commissions

  • Grace periods

  • Flexible financing methods

  • Long term repayment periods

  • Assistance from the BLC's experts at all stages of your project

  • Online tracking of accounts through BLC eBank

Kafalat Loans

Kafalat is a Lebanese company that guarantees low interest Lebanese bank loans for startups and entrepreneurs in Lebanon in the sectors of Industry, Agriculture, Tourism, High Technology and Traditional Crafts. It processes loan applications and helps Lebanese entrepreneurs to access funding that would otherwise be difficult to reach. There are various tailored programmes to choose from, including:

  • Kafalat Basic

  • Kafalat Plus

  • Kafalat Innovative

  • Kafalat Startups and Innovative

  • Kafalat Agriculture

  • Kafalat Energy.

Faro Loans

Faro loans were set up by the Chamber of Commerce, Industry and Agriculture of Beirut and Mount Lebanon (CCIA-BML) specifically to help Lebanese entrepreneurs and startups. They also help the SMEs find European or Mediterranean partners to work with (one of the conditions of the loans). The maximum amount of a loan is $20,000 and the maximum interest rate is 1%. In addition to financial support, support in business planning and feasibility studies is also offered.

2. Competitions

If your competitive side needs a little airing, why not try your luck in one of the competitions mentioned below? Both competitions are holding their finals as part of Global Entrepreneurship Week Lebanon.

Seedstars

The Lebanese leg of the Seedstars World Startup Competition will take place on November 20 and 21, 2014 and ties in with Banque du Liban Circular 331. It will be the arena for 50 Lebanese startups to pitch their bid for a place in the Seedstarts Final in Geneva, Switzerland to win $500, 000 investment.

Startup Cup Bader

The Bader Lebanon Startup Cup, in partnership with the Lebanese bank Bank Audi, ran its second final on November 19, 2014. Out of the applicants, 12 semi-finalist teams are given 4 months of coaching until their number is reduced to 7 and then finally to the top 3 winners. These teams share over LBP 100M in cash prizes and invaluable mentoring and coaching to enable them to take their business to the next level in Lebanon.

3. Venture Capitals

Another source of financing for Lebanese entrepreneurs are venture capitals. They provide funds for startup firms and small businesses who want money and support to grow their company without taking out a bank loan. Venture capitals buy a share in the company and in addition to support and advice, provide the necessary capital to grow the project. After a few years, the shares in the company are usually sold at a higher price. Because the venture capital firms are taking such a high risk, they usually get some say in company decisions and are entitled to a portion of the equity.

In Lebanon, the Berytech Fund, which covers between $100,000 and $1,200,000, and MEVP, which covers between $200,000 and $1,500,000 are available. Both firms focus on information, communication and technology (ICT), and MEVP also considers other areas.

4. Business Angels

An angel investor is an individual backer for small startups or entrepreneurs. Usually the party involved has a personal interest for seeing the new project succeed and therefore cash injections and/or expertise are usually provided early on, as opposed to venture capitalists who usually come in later on in the process. They differ from venture capitalists in that they are using their own money and therefore do not have to ensure that the investments make profits for others.

Bader’s initiative, the Lebanese Business Angel (LBA) puts potential investors (both individuals and institutions) in touch with startup projects that need funding to the amount of $50,000 to $500, 000. Any sectors are considered, provided that they are in the early stage of development and have the creative ability to reach a wide audience, both nationally and internationally.

5. Crowdfunding

Crowdfunding has been growing in popularity over the past few years due to the fact that anyone can get involved. Crowdfunders make the link between entrepreneurs and those interested in funding the project. The idea is that many interested come together and make small contributions which, when pooled together, provide sufficient resources. In Lebanon, Zoomal and Aflamnah are two platforms that are specialists in this area.

Don’t forget to visit Bnooki.com to compare the best offers on http://www.bnooki.com/business-financing and get advice!

 

Tuesday, 18 November 2014 Written by

How to apply for a KAFALAT Loan in Lebanon?

Which bank do I go to for a KAFALAT loan? What are the documents that I need? What is the process? How long does it take? When and how do I get the money?  …

If you want to apply for a KAFALAT loan, you have probably asked yourself all these questions. The answers are simple!

To start with, you can apply for a KAFALAT loan at any bank in Lebanon at any branch. All banks deal with KAFALAT and can take your loan application. For KAFALAT Basic and KAFALAT Plus you are obliged to apply at the bank first while for KAFALAT Innovative, you have the option to apply either at the bank or directly at KAFALAT.

What documents do you need? It’s quite simple; first of all you need a good business plan and financial projections showing how much money your investment will make. You need to prove that this money will allow you to reimburse the KAFALAT loan and pay for your living expenses. Apart from that, you need to prove that you have the right to operate your business on you current location and that you have all the necessary permits. You need also to show that you have no negative history with banks. The most important documents you need to provide are pro-forma invoices. These are bills for all the expenses you need to cover with the loan. So if you want to buy chairs for 200$ you bring bills from the supplier of these chairs. You can only spend the loan according to these bills. There is a detailed list of documents required by KAFALAT at the end of this article.

What’s the process? Once your file is complete at the bank, the bank studies it and decides whether to send it to KAFALAT or not. Remember: it is the bank that gives you the money, and KAFALAT is only the guarantor, so your file has to be approved first by your bank, before it can be sent to KAFALAT. And even if the file is approved by your bank, it does not mean that KAFALAT will automatically approve it too. So both have to approve, first the bank, and then KAFALAT. Once you get both approvals, your file is sent to the Central Bank for some paper work and final check up. There is no specific time for this process at the bank, but usually KAFALAT takes a decision in a period of three weeks.

When and how do you get the money? Once all approvals are given, your bank gives you a credit line for the amount of the KAFALAT loan. Every time you want to withdraw money from your KAFALAT loan, it has to be according to the bills (pro-forma) you had included in your file before. So if you had included a bill of 200$ from your supplier of chairs, the banks issues a check of 200$ for this supplier. Be careful not to cheat! Both the bank and KAFALAT make checkups about the prices and the suppliers!

Required documents related to the borrower:

  • If you are an individual: Borrower ID and/or Commercial Register
  • If you are a company:  Identity Card of the partners and the commercial register of the company
  • Statement from the Risk Centre at the BDL for the borrower and his/her guarantors (statement should not be older than three months). If it’s a company same applies.
  • Signed CDR document in favor of Kafalat SAL
  • Contact details (telephone, email etc.)

 Required documents related to the loan:

  • Feasibility study that shows the financial requirements of the borrower and the means of repayment (any alternative study that shows the sources of funding and where they are spent)
  • Permits or initial approvals from official authorities that authorize the applicant to manufacture product or execute the activity or work at the core of the venture. The relevant official authority depends on where the business is located, and on what the business is about: ex. Municipality, Ministry of Health, etc.
  • Financial statements for the last three years if available
  •  If the turnover of the organization is above 1 million US$/year, the list of the employees of the organization that are registered with the National Social Security Fund (NSSF)
  • List of guarantees related to the loan with the guarantee documents
  • Pro-forma invoices for equipment, raw materials and spare parts to be purchased with the funds borrowed

 Required documents related to the location of the business:

  • If the location of the business is rented: Rent contract and real estate ownership document for the location of the business. The rent contract needs to be valid for the whole duration of the loan unless the contract is regulated by law 92-195. In other words, in the case the rent contract is regulated by law 92-125, that is if the rent contract was signed before 1992, then the rent contract must not state that its validity exceeds the duration of the loan.
  • If the location of the business is owned by the borrower: Real estate ownership document for the location of the business.

 Required documents related to applying for a second Kafalat loan, i.e. loans for business that have previously benefited from a Kafalat loan guarantee:

  • All official invoices related to the previous loan
  • Feasibility study that shows the need to increase the loan
  • Financial statements for the previous period
  • Bank account statement for the previous loan account
  • Report on the expansion of the business that shows the usage of the previous loan
Friday, 07 November 2014 Written by

What is FARO Business Loan and what are its benefits?

Faro Lebanon was launched by the Chamber of Commerce, Industry, and Agriculture of Beirut and Mount Lebanon. It is a fund dedicated to supporting innovative small and medium-sized enterprises (SMEs). The main goal of FARO is to support Lebanese entrepreneurs through providing financial support for their projects and enhancing competitiveness and openness to global markets.

The word FARO stands for “Fond d’Amorçage, de Réalisation et d’Orientation”. FARO Lebanon was established in line with the similar model of FARO France, under the framework of the “Union for the Mediterranean”. It is monitored by a Board of Trustees constituted of representatives from public and private institutions involved in providing support to small and medium-sized enterprises.

To be able to apply for a FARO loan, you must be planning to introduce an innovative product or service, or planning to introduce an innovative idea to deliver a product, service, or business model. Companies, individuals and associations are all eligible to receive this loan. But the person or party benefiting from this special loan should be working with at least one European or Mediterranean partner. This partner could be a client, supplier, or advisor.

The main features of the FARO loan:

  • Maximum Amount: This loan is to support small and medium-sized enterprises, and thus the maximum loan amount is 20,000 USD.
  • Interest Rate: The main benefit of the FARO loan is its extremely low interest rate which is at a maximum of 1%.
  • Loan Period: The repayment phase could be stretched up to 3 years.
  • Grace Period: You could benefit from a grace period up to 1 year, before the start of your repayment schedule.

Let’s take an example: You apply for a FARO loan with an amount of 20,000 USD to be paid back throughout the next 3 years, but without a grace period. At a 1% interest rate, you would end up paying a monthly settlement of 564 USD for 36 months. This means that you will only pay a total interest of 310 USD throughout the loan period, of course in addition to the loan value of 20,000 USD.

FARO Lebanon helps your business beyond the loan amount. The CCIB could help you through preparing bankable financial statements and drawing your business plans. Technical support can be offered as well, in order to meet your business needs.

Make sure you visit the FARO page on bnooki.com, where you can ask questions and apply for the loan online via this link: bnooki.com/faro

Friday, 07 November 2014 Written by

bnooki.com Bnooki Magazine: Your guide to banking and insurance in Lebanon

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