Small and Medium Enterprises Fund initiates legal crackdown

The National Fund for the Care and Development of Small and Medium Enterprises has intensified its efforts to protect public funds and stabilize its financial position.

The Fund has launched a wide-scale legal campaign against entrepreneurs who have defaulted on their loan obligations.

According to informed sources, according to Al-Rai, judicial enforcement files have been officially opened against 110 defaulting SME owners, after repeated attempts at settlement failed.

The Fund’s financing contracts carry an executive formula, giving the institution full legal authority to initiate enforcement cases when beneficiaries violate repayment rules or fail to cooperate with financial reviews.

Warnings Issued to Another Group

Sources confirmed that formal legal warnings were also issued to a separate group of entrepreneurs over violations of the Small Projects regulations.

These violations included deficiencies in the accuracy and reliability of required financial data—information necessary to verify eligibility for funding or to reassess and settle their obligations.

1,040 Active Projects, KD 203 Million in Funding

Official data shows that the Fund currently supervises 1,040 active projects across multiple sectors, with a combined funding value of 203 million Kuwaiti dinars.

Sector shares include commercial 40%, service sector 40%, industrial 14%, craft 4% and the agricultural sector 2%.

Debts Ranging from KD 30,000 to KD 400,000

The debts owed by defaulting entrepreneurs range starting at KD 30,000 and reaching up to KD 400,000. All 110 individuals had previously entered negotiation rounds with the Fund to restructure their debts but failed to reach agreements or demonstrate willingness to comply with proposed settlement plans.

Strict Judicial Measures Enforced

The enforcement procedures undertaken by the Fund include contacting banks to freeze balances equivalent to outstanding debts; requesting the Ministry of Justice to seize vehicles and imposing travel bans on defaulters.

These measures, officials stressed, are essential to safeguard public funds and ensure accountability within the financing system.

Reasons Behind Opening the Legal Files

Sources highlighted two main triggers for opening judicial enforcement cases — long-term suspension of installment payments without justification and two, failure to provide financial documents needed to assess the entrepreneur’s true financial position and eligibility for debt restructuring.

A lack of cooperation, they added, prevents the Fund from evaluating whether projects are operational or have already been abandoned.

Investigations Reveal Closed or Abandoned Projects

Before legal action was taken, the defaulters’ cases were reviewed by the Small Projects Default Committee. Investigations revealed that many had ceased operating their businesses entirely, despite having received funding based on project plans that were never sustained.

Legal Steps Escalate as Non-Responsive Cases Increase

Several rounds of legal notices were issued, especially after beneficiaries ignored repeated requests to submit proof of ongoing operations.

Officials expect the number of enforcement cases to rise further, as the Fund ramps up efforts to reclaim overdue installments—whether through settlement or more aggressive judicial action.

Revised Loan Repayment Mechanism

In support of SME owners, the Fund’s Board of Directors previously approved a new repayment model allowing beneficiaries to utilize the full 15-year repayment period, without penalties related to grace periods or installment postponements.

The change aims to ease financial pressure on Kuwaiti youth and enhance long-term project sustainability within a strong regulatory framework.