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.
- 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