Government mulls 6-month extension on loan repayment for small businesses

Kuwait government is considering extending the loan repayment period for small and medium enterprises (SMEs) funded by the National Fund for the Care and Development of Small and Medium Enterprises for an additional six months. This comes after the current postponement period ends on April 22, 2024.

According to informed sources who spoke to Al-Rai newspaper, the Board of Directors of the Fund reviewed this proposal during its meeting last Thursday and recommended that it be forwarded to the Cabinet for approval. If approved by the Cabinet, this would be the sixth postponement since March 2020.

The sources indicated that there is no exact figure for the number of defaulters on the Fund’s loans. The Fund was established in April 2013 with a capital of 2 billion dinars. Since the beginning of the COVID-19 pandemic in 2020, the Fund has stopped financing any new entrepreneurs due to the decline in liquidity levels in the General Reserve Fund and the lack of clarity regarding entrepreneurs and the future of their projects in light of the economic complexities that have affected markets locally and globally.

With the repeated postponements of payments, it is difficult for the Fund’s officials to determine the default rate, as almost everyone has stopped paying. However, the sources estimated to Al-Rai that the number of defaulters is around 300 entrepreneurs out of 1084 borrowers from the Fund, which is approximately 30%. There are also 138 entrepreneurs who are in default by decision of the Board of Directors, and the total amount of financing granted is 203 million dinars.