Kafalah Program

Kafalah Program

Kafalah program was established with the support of the Ministry of Finance through the Saudi Industrial Development Fund (SIDF) and the banks of KSA. The program is tailored to guarantee the participating bank on the financing given to Small and Medium Enterprises (SMEs).  The main purpose of this program is to encourage banks to provide support to the SME segment, which plays a significant role in the growth of the local economy.  The Saudi government recognizes the need to provide more financing opportunities for SMEs to enhance their capabilities that will enable them to create innovative and high quality products and services, which will subsequently lead to higher volume from local production and generate more employment.

Several industries and business activities may qualify for the guarantee program such as Education, Tourism and leisure, Constructions, Medical-related, Commerce, Contracting Services, Transport and communications, Service-related among others.  This criterion, however, shall still be subject to the credit standards and target industries of the bank.


Kafalah Financing Features ​


  • The Kafalah guarantee only applies to Sharia-compliant financing allowed for banks
  • The maximum financing amount eligible for this program is SAR 2 million
  • The guaranteed amount offered in line with Kafalah is for a maximum of SAR 1.6 million and a minimum of SAR 80,000. 
  • The above-mentioned limits depend on the guarantee amount, which should not exceed 80% of the total finance amount granted to the client by the bank
  • The guarantee issued must match the financing duration granted by the bank but only to a maximum period of seven (7) years


Documentation Requirements at Initial Application


  • Copy of ID/Iqama.
  • Copy of Commercial Registration
  • Copy of the enterprise's foundation contract (if the enterprise is a company).
  • Feasibility study (for new projects) or Business Plan.
  • Copy of audited financial statements (or in house FS) for three years (for existing projects).
  • Profile of activity, sub activity, if any.
  • Any further documents that the Bank requires.


Summary Procedures of Availing the Kafalah


  • The customer submits to the bank a funding request together with the required documentation based on the credit criteria set forth by the bank and the completed Kafalah application form.
  • The bank reviews and processes the customers' request in accordance with its credit criteria and lending standards.
  • Once approved, the bank shall submit a request to the Program for issuing Kafalah for such funding, attached with the written consent of the customer to accept the Kafalah of the Program
  • The Program shall issue the required Kafalah to the bank, after assessing the request and once the application satisfies the requirements of the program.  The program may require the customer further information, documentation or personal guarantees that it deems necessary. 



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