By Mohammad Shoeb
DOHA: Over 550 local Small and Medium-sized Enterprises (SMEs), including startups, have benefited from the various funding schemes of Qatar Development Bank (QDB), with the combined value of aids reaching at QR850m ($233m), a top official of the State-backed financial institution said recently.
“We have provided financial assistance of about QR850m to local firms through QDB’s various programme till today…And I believe it’s a good accomplishment. But I am also aware that it’s not a huge achievement . So we are aiming for bigger,” Abdulaziz bin Nasser Al Khalifa (pictured), CEO of QDB told The Peninsula on the sidelines of an event at the Bank’s headquarters.
Al Khalifa added: “Since the launch of our portfolio programme, it has picked up very well. Under the programme, we have recently signed an agreement with the fifth bank that is Qatar Islamic Bank (QIB). While under Al Dhameen programme we have partnered with 14 banks.”
QDB offers three different loan schemes, Direct lending, Al Dhameen and Housing Loans. Through its Direct Lending and Al Dhameen programme, QDB provides financial aids to the private sector startups and existing companies at highly competitive interest rates and easy terms and conditions that include lengthy and comfortable repayment periods to help the development and growth of SMEs in core economic realms. He said that under the ‘Direct loans scheme, financial assistance, both traditional and Sharia’h-compliant, is offered through project financing facilities for long-term and raw material facilities for short-term. Al Dhameen’s indirect loan programme guarantees loans to private sector companies through the14 partner banks.
Under the direct lending scheme, products are designed to make the journey of a business easier, faster, more efficient and more profitable. The products aim at supporting Qatari companies with projects in manufacturing, healthcare, tourism, education, agriculture, fisheries and farming sectors, existing or start-up companies are qualified for a project financing or a raw material facility. The long-term financing covers a part of total cost of the project, including constructing business premises and purchasing the main production equipment.
Financing terms for repayment vary according to the nature of the project.Repayment could reach a maximum of 15 years with a 3 year grace period which is calculated based on the cash flow of the project. Annual interest rates stand at between 3 percent and 5 percent for industrial sector applications and annual interest rates stand at between 2.5 percent and 4 percent for education, healthcare and tourism sector applications, respectively.
Raw material facility is provided under short-term loan that cover up to 100 percent of the cost of raw materials. It is a revolving credit facility which helps ensure the continuity of the production process, and can be used as capital to cover inventories and receivables. Due to the short-term nature of these loans the repayment period varies, however it will not exceed 12 months with a grace period of between 2 and 6 months.Annual interest rates stand at between 3 percent and 5 percent.
While Al Dhameen programme does not provide direct finance to SMEs, but rather offers the business owner facilities to receive the required finance for their project from a partner bank, through issuance of guarantees in favour of the bank, under which it guarantees a portion of the finance (85 percent of the finance value) not exceeding QR15m. For startups or companies less than 3 years old that are 51 percent Qatari-owned are eligible for guarantees of up to 85 percent of the loan amount, which is limited to QR15m.
Al Dhameen loans can be either in the form of project financing for manufacturing sector, where the maximum tenor is 8 years including a 2 year grace period. Financing for services will have a maximum tenor of 5 years, including one year grace period.
The Peninsula
