Kafalat s.a.l. — Lebanon's Bank-Owned SME Loan Guarantee Corporation

Kafalat s.a.l. is a loan-guarantee corporation founded in 2000 and jointly owned by roughly 50 Lebanese commercial banks together with the National Institute for the Guarantee of Deposits. It guarantees bank loans to small and medium enterprises in five subsidized sectors — industry, agriculture, tourism, high-tech and traditional crafts — with the government covering part of the interest cost. Participating banks receive a 60% exemption from central-bank reserve requirements on Kafalat-guaranteed loans, an incentive credited with driving high uptake.
Kafalat's own published statistics show only 217 loan-guarantee applications rejected across more than two decades of operation, implying a very high approval rate. Independent regional portfolio data compiled by BLOM Invest Bank's BRITE service put outstanding Kafalat guarantees at LBP 138.83 billion in Mount Lebanon and LBP 38.05 billion in North Lebanon as of the second half of 2022. The scheme is referenced as a core SME-finance instrument in Lebanon's Ministry of Economy and Trade national SME strategy roadmap.
The scheme's central weakness is structural: it channels guarantees entirely through Lebanon's commercial banks, a sector that suffered a near-total collapse from 2019 onward, with the World Bank documenting a catastrophic contraction in bank assets and a currency that lost more than 95% of its value. No independently sourced Kafalat lending-volume figures from after 2019 were found, so the scheme's post-crisis functioning cannot be confirmed from public sources — a significant caveat for any assessment of its current impact.

Read the full analysis: https://www.kafalat.com.lb