July 18, 2007

Labour Fund and Shamil Bank of Bahrain to Launch Low Rate Loans for SMEs

The Labour Fund and Shamil Bank of Bahrain, a leading commercial and investment bank, today announced financing worth BD12.5 million, available to small and medium enterprises (SMEs) at a low profit rate of 4 per cent per annum on a reducing balance basis.

The pilot phase of the scheme, an important ingredient in the Labour Fund’s ongoing efforts to reform Bahrain’s labour market, will be launched on 15th August, 2007. During the pilot phase, the sizes of the packages, directed at Bahraini companies, will range between BD 10,000 and BD 50,000.  It will support 50 SME initiatives with Shamil Bank providing Sharia-compliant financing to applicants who meet criteria set by the Labour Fund.  After the pilot scheme, the plan will go into full swing extending loans up to a maximum of BD 100,000. All recipients will be given a generous tenor of up to 10-years to repay the financings, which are being offered at a discounted rate by Shamil Bank and further subsidised by the Labour Fund.

“The growth and prosperity of SMEs, which represent a sizeable segment of the national economy, is directly linked to job creation. As an independent semi-governmental organisation directly involved in Bahrain’s labour reforms, the Labour Fund is pleased to announce this important venture made possible with the support of one of Bahrain’s leading Islamic financial institutions,” said Labour Fund Acting Chief Executive, Abdulellah Al Qassimi.

Labour Fund  Acting VP, Private Sector Support, Mohammed Jaffer Shubber said that one of the Fund’s primary long-term goals is to make SMEs more attractive to financiers.“ Among the factors limiting the growth of SMEs at the moment are strict bank collateral requirements. Working with our partner Shamil Bank, we have managed to structure a scheme that allows SMEs to get easier access to finance,” he said.

“These are by far the lowest rates being offered to SMEs in the Kingdom. Since the aim of this project is developmental rather than profit-based, the Labour Fund has subsidised the already low rates provided by Shamil Bank to make the packages as attractive as possible,” said Shubber.

Shamil Bank’s tender offer was selected for the project by the Labour Fund from among several other institutions. Shamil Bank Chief Executive, Mohamed Hussain, said that as a Bahrain-based institution, Shamil Bank is proud to support the Kingdom’s developmental goals call for the private sector to become the driving force for economic growth.  “This project is a great chance for SMEs to raise the funding they need to expand their businesses, implement new ideas and in due course create more employment opportunities for Bahrainis. We commend the efforts made by the Labour Fund to improve market conditions for both the private sector and the country’s workforce,” he said.

Shamil Bank Senior Manager, Corporate Banking Farooq Al Awadhi said that the Bank has streamlined procedures to make it quick and easy for applicants to complete the process.“  Shamil Bank prides itself in being an innovator in structuring packages that are both fair to consumers and in line with the ethical principles of the Sharia. If applicants meet the financing criteria, the process will be over very quickly. Profit rates this low are a unique opportunity which SMEs are strongly advised to look into,” he said.

In order to be eligible for the scheme, applicants must own businesses showing good potential that are at least one year old and they will need to submit their audited accounts to the bank. A business plan may be required for loans above BD50,000. Applicants must have good credit histories and no criminal records.

Applications will be received at Shamil Bank’s main office on the 9th floor of Seef Tower during the pilot phase and later through its network of branches throughout the kingdom.