Andy Sambldge, 27 March 2011
Saudi Arabia’s government has raised its guarantee to banks offering loans to small and medium sized enterprises (SME) in a bid to increase funding to entrepreneurs.
Dr Ibrahim Al Assaf, the Minister of Finance, has announced that the guarantee for SME loans will rise to 80 percent to the maximum of SR1.6m for a single enterprise.
The maximum limit of total guarantees of sole proprietorships has also increased to SR5m, and for companies to SR10m.
Al Assaf added that the definition of SMEs had also changed to a company whose annual sales do not exceed SR30m, instead of SR20m previously.
The Finance Guarantee Programme (FGP) is one of the Saudi government’s initiatives to support SMEs, the minister said, adding that they played a “pivotal role” in the economy.
“Funding problems along with risk guarantee (a tangible security) are the most prominent obstacles in the face of SMEs progress,” he said, adding that the changes would ease the problem.
“Moreover, the Credit Guarantee Programme is one of the solutions which will contribute in prompting banks to provide credit facilities for a broader-spectrum of the economically viable enterprises to play their role in the national economy,” he added.