The Ministry of Planning and International Cooperation on Wednesday announced the official launch of a credit guarantee fund designed to improve small enterprises’ access to financing.
The fund, the first initiative of its kind in the Kingdom, seeks to provide entrepreneurs and owners of small- and medium-sized enterprises (SMEs) with guarantees when they apply for financing from the Development and Employment Fund (DEF).
According to an agreement, signed on Wednesday by Minister of Planning and International Cooperation Jafar Hassan, Director General of the Jordan Loan Guarantee Corporation (JLGC) Mohammad Jafari and DEF Director General Omar Omari, the ministry will allocate JD1 million for this purpose. The funds will be deposited at the JLGC.
The ministry will later raise the amount to JD1.25 million.
Hassan said the fund seeks to increase productivity and enhance development in the country, particularly in poor areas.
The DEF will offer medium- and long-term financing to feasible enterprises, while the JLGC will guarantee up to 70 per cent of each loan, according to Hassan, who indicated that the majority of SMEs face difficulties in securing credit due to their inability to meet guarantee requirements.
According to official figures, small- and medium-scale projects receive less than 10 per cent of all credit facilities extended by financial institutions.
The contribution of SMEs to gross domestic product is around 40 per cent, and they account for nearly 70 per cent of created job opportunities.Around 99 per cent of business establishments in the Kingdom are SMEs, according to the figures.