Beneficiaries: All Micro-, Small and Medium Enterprises (MSMEs) as per SAMA Circular No. 381000064902 dated 16/06/1438H, as well as finance companies under SAMA supervision
Fees: All amounts or commissions incurred by the customer during the contractual relationship, including administrative fees, application fees, relationship management fees, letters of credit or letters of guarantee fees.
A: This Program is launched as a part of SAMA's role to activate monetary policy tools and promote financial stability, including enabling the financial sector to support the private sector growth, with a view to:
1. support the government’s efforts to combat the novel Coronavirus (COVID-19);
2. ease the expected financial and economic impacts on the private sector as a result of combating COVID-19; and
3. support the private sector, especially MSMEs, to play its role in promoting economic growth.
A: The value of Program for the current stage is SAR 50 billion. Its term will be determined according to operational procedures and action programs. The table below provides Program’s details:
Q3: How to contact SAMA regarding the Program?
A: SAMA can reached at its toll-free number (8001256666), its local number (0114633000) through the following extensions: (2272), (4296), (5824), or Email: (CPD@SAMA.GOV.SA).
FAQ on Deferred Payments Program
Q1: Who are the beneficiaries? Are there any conditions to be met to be eligible for the Deferred Payments Program?
A: All MSMEs according to SAMA Circular No. 381000064902 dated 16/06/1438H, as well as finance companies under SAMA supervision. Such beneficiaries can benefit from the Program if their credit exposures are classified on 14 March 2020, by the financier, as Stage 1 or 2 (committed to regular payment before 14 March 2020) under the IFRS 9 Expected Credit Loss (ECL) model.
Q2: How can the beneficiaries know their classification, whether their credit exposures are classified as Stage 1 or 2 under IFRS 9, and if they are eligible for the deferral of payments?
A: The beneficiary can contact the financier and inquire about its eligibility for deferred payments according to the conditions of the Program. The financier will formally notify the beneficiary of its (in)eligibility.
Q3: Can the beneficiary defer the payment of due installments if the credit relationship is established after 14 March 2020?
A: No, deferring the payment of due installments is only for beneficiaries having an existing credit relationship with a financier on or before 14 March 2020. Credit facilities granted after 14 March 2020 are not eligible for deferral of payment. Beneficiaries wishing to defer payments can benefit from the Guaranteed Facility Program that provides concessional loans with a deferral period of six months.
Q4: What are the due installments that can be deferred and for how long?
A: These include all loan installments payable by beneficiaries, including profits, as from 14 March to14 September 2020. The payment deferral will be for a maximum period of six months.
Q5: Does the deferral cover all existing obligations of the beneficiaries?
A: The deferral covers due installments of the credit facilities granted to the beneficiaries, provided that the credit exposures of such beneficiaries are classified on 14 March 2020, by the financier, as Stage 1 or 2 (committed to regular payment before 14 March 2020) under the IFRS 9 Expected Credit Loss (ECL) model.
Q6: Does the deferred payment include only loan installments without the profits?
A: No, the deferred payment is for all due installments including profits and other related amounts, such as insurance.
Q7: Can beneficiaries with overdue installments (installments of the period prior to March 2020) benefit from the deferral?
A: Yes, these beneficiaries can benefit from the deferral if their credit exposures are classified on 14 March 2020, by the financier, as Stage 1 or 2 (committed to regular payment before 14 March 2020) under the IFRS 9 Expected Credit Loss (ECL) model. However, the deferral is for the installments that become due during the deferral period (from 14 March to 14 September 2020) without affecting the obligation of the beneficiaries to pay their past due installments.
Q8: Does the Program include deferred payment of monthly installments of finance companies payable to commercial banks and the Saudi Real Estate Refinance Company?
A: Yes, provided that the credit exposures of such beneficiaries are classified on 14 March 2020, by the creditor, as Stage 1 or 2 (committed to regular payment before 14 March 2020) under the IFRS 9 Expected Credit Loss (ECL) model.
Q9: Does the Program cover loans granted under the SME Indirect Lending Initiative launched by the Social Development Bank?
A: No, the Social Development Bank and the General Authority for Small and Medium Enterprises (Monshaat) are responsible for such loans.
Q10: Are there any additional fees for payment deferral?
A: No additional fees will be added to the fees already determined under the agreement signed by the financier and the beneficiary, such as rescheduling fees or additional profits to compensate for the deferral period.
Q11: In case of debt rescheduling, will the funding amount remain the same as stated in the existing agreement between the financier and the beneficiary or will it be recalculated according to the current rates?
A: The debt will be rescheduled and the funding amount will be recalculated at the current lending rates; however, the new funding amount must not exceed the previous funding amount granted to the beneficiary.
Q12: Does the beneficiary have to contact the financier to join the Deferred Payments Program?
A: No, the financier must formally inform the beneficiary of rescheduling and payment deferral, using a legally approved method.
Q13: To complete the rescheduling process, the beneficiary may be required to sign new legal documents. How can this be done under the current circumstances, and would this affect the beneficiary’s credit record at the Saudi Credit Bureau (SIMAH)?
A: The financier has the right to carry out rescheduling in a way it deems appropriate; however, the rescheduling process must be documented using a legally recognized means. The financier must also update the beneficiary’s credit record at SIMAH accordingly.
Q14: Does the beneficiary have the option to accept or refuse payment deferral and debt rescheduling, and is the beneficiary’s approval required in both cases?
A: The beneficiary has the option to accept or refuse payment deferral and debt rescheduling. In case of acceptance, the financier must obtain a formal approval from the beneficiary. In case of refusal, the relationship between the two parties will continue according to the existing agreement, and the financier will not be required to obtain the beneficiary’s approval.
Q15: How can the financier receive the amount allocated by the Program to cover deferral of installments payable by beneficiaries?
A: Finance companies can join the Program after signing the required agreements with SAMA. However, banks will be deposited directly.
Q16: Some financiers use agreement forms that do not offer rescheduling to comply with the decision of the Sharia Committee, but rather offer a six-month extension without profits. How will such agreements be dealt with and processed financially?
A: The financiers has the right to reschedule the debt or extend the agreement term and take the necessary financial and legal actions without any additional fees.
Q17: In case of finance lease and extending agreement for six months, the cost of insurance is prepaid to the insurance company and monthly collected from the customer. Will collection continue during the six-month term extension?
A: The insurance cost is included in the payments, and it is not allowed to collect the insurance cost or any amounts during the deferral period. The financier may collect the insurance cost through the installments paid for the months following the deferral period, whether by extending the term of agreement for a similar period or by rescheduling.
Q18: Can the financier use the amount deposited by SAMA to mitigate the effect of payment deferral on its revenues?
A: Yes, the financier can use the amounts deposited to mitigate the effect of payment deferral on its revenues as it deems appropriate. However, the financier must make the repayment as scheduled in the agreement.
Q19: If the beneficiary has more than one credit facility, will the six-month payment deferral include credit term extension?
A: Payment of installments will be deferred for a period of six months by extending the terms of credit facilities granted to the beneficiary for a similar period. However, the beneficiary has the right to extend the terms for less than six months.
Q20: Does the Program cover payments due before 14 March 2020 for credit facilities classified as Stage 1 or 2 under IFRS 9 Expected Credit Loss (ECL) model?
A: No, the Program only cover payments due on or after 14 March 2020 for credit facilities classified, by the financier, as Stage 1 or 2 (committed to regular payment before 14 March 2020) under the IFRS 9 Expected Credit Loss (ECL) model.
Q21: If beneficiaries have payments that are due and have already been deferred, can such payments be deferred under the Deferred Payments Program?
A: Any payments due on or after 14 March 2020 can be deferred until 14 September 2020 even if they have previously been deferred.
Q22: Can the credit facilities classified as Stage 2 under the IFRS 9 Expected Credit Loss (ECL) model be included in the Deferred Payments Program?
A: Yes, credit facilities classified as Stage 2 for customers who are committed to regular payment before 14 March 2020 can be included.
Q23: Is there a definition for the credit facilities classified as Stage 1 or 2 under IFRS 9 Expected Credit Loss model?
A: No, it depends on the policy followed by the financier in preparing the financial statements and approved by the external auditor.
Q24: If there are payments due from beneficiaries and related to contract entitlements, will they be settled upon receiving the contract entitlements?
A: Yes, if these payments are due before 14 March 2020 or after 14 September 2020.
Q25: Will due payments (monthly cash flows due to banks) for off-budget financing portfolios (portfolio sales) be deferred?
A: Yes, the finance company must defer due payments for beneficiaries to whom the Program’s terms for off-budget financing portfolios apply, and must coordinate with the banks in this regard.
Q26: What type of guarantees can the financier provide to SAMA?
A: This requirement applies to finance companies and there is no specific type of guarantee required. According to the agreement signed with SAMA, the size of guarantee must be proportional to the size of existing obligations, if requested.
Q27: What is the mechanism for depositing the support amount with the financier, and how much will the interest be?
A: An amount will be deposited for each creditor, representing the full costs arising from the deferral with zero interest rate. The amount must be repaid after the end of the Program term and within three years.
Q28: Will all deferral costs payable by beneficiaries be covered by SAMA?
A: The amount allocated will be used to cover the funding costs of financier.
Q29: Will payments be deferred for productive families, craftsmen, and small business owners who are classified as individuals under microfinance companies?
A: Yes, payments will be deferred for beneficiaries eligible for the Program.
Q30: Are financiers (banks and the real estate refinance companies) required to defer payments due from finance companies?
A: Yes, finance companies are among the beneficiaries included in the Program, and the due payments are deferred during the period from 14 March 2020 to 14 September 2020 and without any additional costs.
Q31: Can beneficiaries of Kafalah guarantees benefit from the Program?
A: Yes, if they meet the requirements of the Program.
Q32: Are the Sukuk issued by the financier or facilities provided by the investment funds included in the Program?
A: This requirement applies to finance companies under SAMA supervision and the Program does not include payments due to Sukuk or investment funds.
Q33: Are payments due from subsidiaries of large companies can be deferred even if the guarantees are provided by the large company, or if the credit limits granted to the subsidiary were used?
A: All MSMEs as per SAMA Circular No. 381000064902 dated 16/06/1438H, including subsidiaries of large companies, excluding special purpose entities. In the absence of information about the revenues, number of employees, or organizational structure of such entities, they will be treated in the same way the “Group” treats them.
Q34: Are payments of indirect facilities (letters of credit or letters of guarantee) can be deferred?
A: Yes, all payments due in exchange for indirect facilities (letters of credit or letters of guarantee) can be deferred, with the exception of the letters of final guarantees issued for the implementation of projects, as the bank can collect the payments due from the proceeds of these project contracts during the period (from 14 March to 14 September 2020), if the financier is sure that the customer (the beneficiary) has not been affected by the measures taken in response to Covid-19.
FAQ on Guaranteed Facility Program
Q1: Who are the beneficiaries? Are there any conditions to be met to be eligible for the Deferred Payments Program?
A: All MSMEs per SAMA Circular No. 381000064902 dated 16/06/1438H. Such beneficiaries can benefit from the Program according to Kafalah Program, and subject to the policies of granting credit to financiers cooperating with Kafalah Program.
Q2: Can the financier use the Program amount to finance beneficiaries with which it has existing credit relationships?
A: The financier can benefit from the Program and use the amount to finance beneficiaries with or without existing credit relationships. Various types of credit facilities currently offered to the MSME sector can be offered, including employee salary financing, facility bills financing, working capital financing, long-term loans, guarantees, and credits.
Q3: How can a beneficiary know if the credit facilities granted are supported by SAMA under the Program?
A: Upon granting credit facilities, the financier must, in writing, notify the Program beneficiaries that the financing cost is supported by the Guaranteed Facility Program.
Q4: Is there a specific period of time for beneficiaries to benefit from the Program?
A: The Program is valid for one calendar year, starting from 14 March 2020, and is renewable for an additional year according to the market conditions and SAMA’s discretion.
Q5: When can the financier benefit from the amount allocated for the Program?
A: Finance companies can benefit from the Program after signing the necessary agreements with SAMA and when submitting the drawdown request. On the other hand, banks can submit the drawdown request through the automated system between SAMA and banks according to the procedures followed in the Treasury Department.
Q6: The previous mechanism for the Funding for Lending Program specified that repayment must be made to SAMA within (36) months from the date of granting the loan to the beneficiaries. Will payments be made in installments according to the installments of the finance granted to the beneficiaries, or will the payments be made to SAMA at the end of the period specified (after 36 months)?
A: The loan repayment period has not changed in the current program, for banks: the full amount shall be paid to SAMA within a period of (36) months from the date of withdrawal, provided that the period of the facilities is determined when the application is sent through the system, with a maximum period of (36) months. for finance companies: the amount is amortized (amortization) will be made within a period of (36) months from the date of deposit, with a six-month payment deferral.
Q7: Is it possible to request finance in any amount and, when amortized, is it possible to request another finance?
A: Yes, in an amount not less than the minimum amount that can be obtained from the Program and not exceeding the maximum amount specified for the financier from the Program amount (SAR 13.2 billion).
Q8: What is the minimum amount of drawdown from the Program amount, and how many drawdown requests can be submitted by a financier to benefit from the Program?
A: The minimum amount is SAR 10 million, and any number of drawdown requests can be submitted, provided that the conditions in the agreement are met.
Q9: Is there a maximum profit limit for the finance granted under the Program?
A: Yes, when obtaining profits or administrative fees, financiers are required not to exceed 4% of the finance value annually (flat rate), excluding Kafalah fees paid by SAMA.
Q10: Are there any conditions regarding the repayment period of the finance granted to the beneficiaries under this Program?
A: Yes, financiers are required to grant beneficiaries a period not less than six months (from the date of finance) to repay the loans granted under the Program.
Q11: Are profits calculated once the finance is granted or after the six-month repayment period?
A: The decision is up to the financier, provided that profits and fees do not exceed 4% of the finance value annually.
Q12: What type of guarantees can the financier provide to SAMA?
A: This requirement applies to finance companies and there is no specific type of guarantee required. According to the agreement signed with SAMA, the size of guarantee must be proportional to the size of existing obligations, if requested.
Q13: How can financiers benefit from the amount allocated for the Program?
A: The financier should submit a request to withdraw from the amount allocated for the Program to SAMA as per the method to be specified in the agreement. Then SAMA deposits the amount into the account of the financier, provided that the full amount is to be given to the beneficiary within two weeks at a maximum from the date of the drawdown request.
Q14: What is the amortization period of the finance amount that the financier must adhere to under the Program?
A: The financier must amortize the finance amount within two weeks from the date of transfer. SAMA may extend this period up to no more than a month from the date of withdrawal.
Q15: How are SAMA-supported rates calculated for facilities granted to financiers to implement this Program?
A: Facilities will be given to financiers at a zero interest rate, provided that the cost of the zero facilities provided by SAMA (e.g. funding costs) is calculated when calculating the cost of the facilities granted to the beneficiaries under this program. The annual maximum profit rate shall not exceed 4% of the finance value.
Q16: The Private Sector Finance Support Program mechanism states that SAMA must receive a monthly report on the Program progress at the financier. What are the reporting requirements and submission dates?
A: All financiers will be provided with the approved form of report and relevant instructions, which must be submitted on a weekly basis.
Q17: Are all financiers (banks and finance companies) required to open an independent bank account to benefit from the Program?
A: No, this requirement applies only to finance companies.
Q18: Can financiers obtain guarantees from beneficiaries? Does cash insurance include letters of guarantee and letters of credit?
A: Financiers should not request any guarantees in kind from the beneficiaries for all finance products, including letters of guarantee and letters of credit, as the Program guarantees 95% of the value of the finance granted according to the mechanism approved by Kafalah Program, with a maximum period of three years, and in proportion to the period of the facilities granted. It is not allowed to block any amount of the finance granted under this Program as a guarantee or for any other purposes, and this does not apply to the financed assets, for example, Ijarah contract assets.
Q19: If a beneficiary is funded according to the previous Funding for Lending Program mechanism, what are the available options?
A: Financiers must communicate (through a documented means of communication) with their customers who were funded in accordance with the terms of the Funding for Lending Program and offer the option of refinancing according to the terms of the Guaranteed Facility Program if they are eligible. Customers’ approval or refusal to the change of terms, if any, must be documented.
Q20: For how long will SAMA pay Kafalah fees from this Program?
A: SAMA will pay Kafalah fees for a maximum period of three years.
Q21: Is there a minimum amount of finance for this Program?
A: There is no minimum amount of finance and this will be subject to the financier’s credit policies.
Q22: Is there a specific term for the finance granted under this Program to the beneficiaries?
A: Yes, the finance term must not exceed a period of (36) months, including the grace period.
Q23: Is the finance amount guarantee of 95% offered for the entire finance term, which exceeds one year?
A: Yes, and the finance term must not exceed a period of (36) months, including the grace period, in order for Kafalah guarantees to be in proportion to the required finance term.
Q24: Will financiers be credited for the guaranteed 95% of the finance amount?
A: No, Kafalah Program will guarantee 95% of the finance amount granted under this Program.
Q25: If the customer provides guarantees in kind in exchange for existing facilities, should they be canceled to obtain the finance offered under this Program?
A: No, because guarantees are related to facilities not granted under this Program, and the customer should not provide any guarantees in kind to obtain facilities under this Program.
Q26: If the beneficiary requests a finance amount that exceeds the guarantee ceiling specified in Kafalah Program, will the finance amount be offered according to the guarantee ceiling to cover (95%), or will the finance be offered with an amount higher than the ceiling and with a lower coverage rate?
A: The current guarantee ceiling from Kafalah Program is SAR 2.5 million for micro-, SAR 5 million for small, and SAR 15 million for medium enterprises. Customers eligible for the Program can be funded with a lower coverage rate according to the policy of Kafalah Program and in proportion to the risk limits accepted by the financier. Customers can also be funded by the financier (not under the Guaranteed Facility Program) according to other conditions set by the financier, provided that financiers must inform customers and document their approval or refusal.
Q27: Is there a minimum age for the establishment to be eligible for the Program?
A: There is no minimum age and the Program includes all MSMEs in all stages and in accordance with the financier’s credit policies.
Q28: Does the Program include companies in all economic sectors?
A: Yes, except for activities that are not eligible to benefit from Kafala Program, which are as follows:
a. speculation, for example, banking, real estate, or securities speculation in addition to financing projects.
b. insurance and re-insurance activities, except for insurance services providers.
c. money and currency changing business.
Q29: Does the Program include foreign companies licensed by the Ministry of Investment?
A: Yes, if the company is licensed from competent authorities to practice business in Saudi Arabia, and according to the financier’s credit policies.
Q30: Is it possible to reschedule / restructure the existing outstanding finance guaranteed or non-guaranteed under the Guaranteed Facility Program?
A:
1. If the existing finance is granted under the Guaranteed Facility Program (with an existing guarantee), the finance can be rescheduled under this Program.
2. If the existing finance is not granted under the Guaranteed Facility Program (with an existing guarantee), the finance can be rescheduled under this Program, and Kafalah Program will review such requests to make a decision based on the internal regulations. In addition, customers must adhere to the conditions of Kafalah Program when submitting rescheduling / restructuring requests.
3. As for the non-guaranteed finance classified as lower than Stage 2 according to IFRS9 on 14 March 2020, the finance will be guaranteed and included in the initiative without any profits or administrative fees for rescheduling.
4. As for the non-guaranteed finance classified as higher than Stage 2 according to IFRS9 on 14 March 2020, the finance is not included in the Guaranteed Facility Program.
Q31: What are the conditions for guarantee monetization for this Program?
A: Subject to the procedures and conditions set by Kafalah Program.
FAQ on Loan Guarantee Program
Q1: Who are the beneficiaries? Are there any conditions to be met by those beneficiaries to benefit from the Program?
A: Beneficiaries include all MSMEs according to SAMA Circular No. 381000064902 dated 16/06/1438 and financing companies under SAMA supervision, benefitted from SMEs Loan Guarantees Program (Kafalah Program) during the period from 14 March 2020 to 31 December 2020.
Q2: Does the exemption apply to administrative fees collected by Kafalah Program and the cost of finance granted to the beneficiaries?
A: The beneficiaries are exempted from paying the fees of guarantees issued by Kafalah Program, such fees include those of issuance, renewal, extension and rescheduling. However, the beneficiaries are not exempted from paying the financing costs.
Q3: Are there any requirements that the beneficiaries must meet in order to benefit from the Program?
A: There are no requirements that must be met by the beneficiaries to get the exemption from paying the fees of Loan Guarantee Program (Kafalah).
Q4: Is it necessary to notify the beneficiary that it is being exempted from the fees of Loan Guarantee Program (Kafalah)?
A: All financiers must inform the beneficiaries in an official way that they are exempted from the fees of Loan Guarantee Program (Kafalah) during the program period from 14 March 2020 to 31 December 2020.
Q5: Are the fees of Loan Guarantee Program (Kafalah) paid by the financier or SAMA?
A: As per the current procedures, those fees will be paid by the financier, and the amounts are to be settled between SAMA and the financier.
Q6: The Program mechanism states that SAMA must be provided with a monthly statement showing the total fees paid for Kafalah Program. What are the reporting requirements and submission dates?
A: SAMA will pay the fees of Kafalah Program quarterly according to the reports received from Kafalah during the period, and financiers are not required to provide monthly reports to SAMA.
Q7: Does the financier have to sign an agreement with SAMA to implement the Program?
A: No, reports sent from Kafalah to SAMA during the period are sufficient, and financiers are not required to provide monthly reports to SAMA.
Q8: What is the mechanism used for settling the fees paid by the financiers for the Loan Guarantee Program (Kafalah)?
A: Upon calculating and reviewing those fees, SAMA will repay the financier the paid fees via SARIE.
Q9: When are the fees paid by financiers for Loan Guarantee Program (Kafalah) settled?
A: Within 30 days from the date of submitting the monthly statement indicating total paid fees.
Q10: How will the fees related to guarantees issued from Kafalah Program be covered?
A: Issuance, renewal, extension, and rescheduling fees for guarantees issued from Kafalah Program will be covered for one year or less, and the company shall pay the fees for the following years, excluding the three year guarantees issued in Guaranteed Facility Program. Below are examples of cases included:
#
| Case | Procedure |
1 | The company submits the request to the financier on (1 April 2020) and the guarantee period (the loan) is three years. | SAMA will cover the guarantee for one year until 31 March 2021. In the second year, the financier will collect the fees from the company on a regular basis.
|
2 | The company submits the request to the financier on (30 December 2020) and the guarantee period (the loan) is three years.
| SAMA will cover the guarantee for one year until 29 December 2021. In the second year, the financier will collect the fees from the company on a regular basis.
|
| 3 | The company submits the request to the financier on (1 April 2020) and the guarantee period (the loan) is 8 months. | SAMA will cover the guarantee for 8 months until 30 November 2020. |
4
| The company submits the request to the financier on (1 March 2021) and the guarantee period (the loan) is three years.
| SAMA will not cover the guarantee because the request is submitted after 31 December 2020. The financier will collect the fees from the company on a regular basis. |
FAQ on POS & E-Commerce Transaction Fees Support Program
Q1: What fees SAMA will pay?
A: All purchases fees for POS and e-commerce services from stores and private sector enterprises for (6) months using all types of cards and international networks accepted in Saudi Arabia. The transactions should be processed by an entity in Saudi Arabia and made at domestic sales outlets or on online shopping websites or applications for different business activities operated by local businesses licensed by an official authority in Saudi Arabia.
Q2: Does SAMA pay all fees, including transaction fees of MADA cards and credit cards?
A: SAMA will pay all transaction fees of the POS and e-commerce services on behalf of stores and private sector entities for a six-month period.
Q3: When will the fixed monthly fee be suspended for stores with transactions less than SAR 15,000?
A: The said fee will be suspended for 6 months, which is the support period, from 14 March 2020 to 14 September 2020.
Q4: What is the mechanism followed for sharing the standard form for collecting outstanding fees and amounts? Are there any requirements for beneficiaries?
A: There are not requirements that must be met by the beneficiaries (stores), as the standard form for collecting outstanding fees and amounts has been shared with banks and licensed payment service providers.
Q5: The program mechanism states that the transactions where the merchant is an entity licensed by SAMA are excluded from the POS and E-Commerce Service Fee Support Program. What are the licensed entities here?
A: All authorized entities supervised by SAMA in all sectors (insurance companies, finance companies, payments companies, banks, money exchangers).
Q6: Does the support include POS & E-Commerce service providers in the aggregation model?
A: Yes.
Q7: Does the support include compensation for banks and payment service providers against VAT fees?
A: Yes.