Q. Who Benefit from Jordan Loan Guarantee Programmes?

JLGC’s guarantees are designed to benefit the SME’s in Jordan through impacting :  

1. The Banking & Financing Sector in Jordan under the Loan Guarantee Programme, to enable them to provide financing to SME’s with JLGC’s Guarantees.
    

2. The Jordanian Exporters & Business People through the Credit Guarantee Programme, to enable them to cover their commercial & political risks associated with trading both domestically and internationally.

Questions About The Loan Guarantee Programm

Q. Does The Corporation Grant Loans To Projects?

JLGC does not actually grant loans directly to projects, but rather facilitates the opportunity for the borrower to get the appropriate credit necessary for his project through Participating Banks at the prevailing interest rate. No extra cost is carried by the borrower as a result of JLGC guaranteeing their credit risks.

Q. What Are The Sectors Guaranteed By JLGC?

1.  Agricultural projects (fruits, animal husbandry and their products).

2. Industrial and service projects of all kinds.

3. Miscellaneous crafts (carpentry, blacksmithing, tire repair, turnery, etc.).

4. Miscellaneous services (tourism, information, education including schools and
  kindergarten, etc.).

5. Miscellaneous professions (medical doctors, lawyers, engineers, consultants,
   etc.).

6. Transportation sector including trucks, tanks, dump trucks, public service cars,
   and heavy-duty machinery.

7. Commercial sector, excluding real-estate and commercial speculations, trading    in shares and bonds, projects with no regular cash flows, and projects with no fixed location.

Q. What Are The Targeted Projects?

These are small to medium-sized projects operating in Jordan and owned by the private sector. Such projects need to be productive in nature with a labour force not exceeding 50 workers. They can be either new or existing projects undergoing expansion and development to increase their productivity.

Q. What Interest Rate Does JLGC Charge The Borrower?

JLGC does not charge the borrower any interest or commission. The lending bank charges the borrower the prevailing interest rate.

Q. Then, How Does The JLGC Benefit From The Guarantee?

One of the main objectives of JLGC is to encourage banks to lend to newly established, small to medium sized, industrial and service businesses or to facilitate the expansion of existing, similarly sized establishments. Because these projects are considered essential to the economy, this objective aims to enhance the sustainable economic growth in the Kingdom.

There is no doubt that making available the needed financing for targeted projects will contribute to the stability and development of these projects. This, in turn, will contribute by creating new job opportunities, save foreign exchange, support the economy, extend the customer base of banks, and make a qualitative change in the banking credit decision making by relying on the feasibility of the project and its related cash flows rather than on the availability of conventional collateral.

Q. How Is The Guarantee Process Performed? And What Is The Ceiling For Qualified Loans By JLGC?

In order to enhance the opportunity for small and medium-sized projects to obtaining the needed credit, JLGC guarantees 75% of the outstanding balance for all types of loans valued below JD 40,000. It also guarantees 50% of loans valued between JD 40,000 and JD 100,000 as well as partial guarantee of loans exceeding JD 100,000.

The loan application is submitted by the borrower directly to the bank, which studies the application in accordance with a set of standards and then routes it to JLGC for further study and final approval.

Q. What Are The Pre-Requisites For The Borrower Who Approaches The Bank To Make Use Of The Services Offered By JLGC?

The borrower is required to submit the following documents to the bank:

·All documents that prove the establishment of the project or the plan thereto.

·The economic feasibility study and cash flow analysis of the project to make sure that the borrower will be capable to repay the loan.

·The collateral available to the borrower.

·The insurance of the project and/or life insurance of the borrower.

Q. What Is The Role Of JLGC After Submission To The Bank?

JLGC encourages the bank to offer the necessary credit to the borrower regardless of the appropriate conventional collateral and to accept the available collateral depending on the economic feasibility of the project.

Q. What Is The Loan Period To Be Guaranteed By JLGC?

The loan period is either short or medium-term, not to exceed 6 years including the maximum grace period of one year. This period is determined according to the nature of the project, its life-time, its cash flows, and associated financial data. Repayment will be in monthly, quarterly, semi-annual, or annual installments according to the cash flow of the project.

Q. Does JLGC Guarantee Real Estate (Housing) Loans? And If So, Do Housing Loans Have The Same Lifetime As Ordinary Loans?

In line with the policy of encouraging commercial banks to extend low and middle-income people, loans for building, buying, or repairing a personal home, JLGC offers a guarantee through the following banks: Cairo-Amman Bank, Arab Land Bank /Jordan, Arab Banking Corporation/Jordan, Arab Jordan Investment Bank, Union Bank for Savings and Investment, and the Arab Bank, Jordan National Bank, and Bank of Jordan.

Housing loans are granted according to the following arrangements:

Maximum loan amount of JD 50,000.

JLGC guarantees 75% of the maximum loan amount.

JLGC might offer partial guarantee for those loans exceeding JD 50,000.

There should be real-estate mortgage and a proven source of income for the applicant.

The loan period is up to 15 years.

Q. What Are The Non-Eligible Sectors For JLGC Guarantees?

Import trade, commercial and real estate speculation, trading in shares and bonds, commercial businesses where a regular cash flow cannot be determined, refinancing of already outstanding loans, or loan rescheduling. Also non-eligible are those loans that do not conform with the general lending principles of commercial banks.

Q. What Are The Required Records And Documents From The Borrower To JLGC?

Financial data about the borrower.

Primary cash flow data and economic feasibility study of project.

Basic records and documents such as Professional license, Registration Certificate in the Trade Registry, Chamber of Industry Certificate, Chamber of Commerce Certificate, and lease contract.

Banks will assist borrowers in preparing the necessary data concerning their assets, liabilities, and cash flows if the borrower needs such assistance. In addition, JLGC through its Counseling Services Unit, assists the owners of targeted projects in preparing the economic feasibility study and cash flow analysis in order to facilitate and accelerate receiving the necessary credit.

Q. Are There Other Programmes Guaranteed By JLGC?

Craft Zone Programmes

In cooperation with the Industrial Development Bank, JLGC guarantees the risks associated with loans advanced to craftsmen working in the newly established craft zone in Aqaba. In addition, JLGC guarantees credit risks for all craftsmen projects in different parts of the Kingdom.

Public Car Replacement Programme

This is done within the following conditions:

·Maximum loan amount of JD 15,000.

·Maximum financing period of 50 months, including 2 month grace period.

·Acceptable guarantor with adequate income.

·Endorsed full-coverage car insurance policy.

Q. Is It Possible To Guarantee Imported Goods From Abroad?

It is possible to guarantee credit risks associated only with the purchasing of raw materials and equipment from abroad, which will be used in production. JLGC however does not guarantee credit used in importing finished goods for domestic consumption.

Q. Is It Possible To Guarantee Loans Used In Settling Outstanding Financial Liabilities To Banks?

JLGC has no interest in guaranteeing loans for settling outstanding financial liabilities, guaranteeing existing loans, or guaranteeing their extensions. It is possible though, to guarantee new loans for borrowers who are beneficiaries from outstanding loans, on a condition that such borrowers are on good terms with the bank, committed to their on time repayment, and capable of settling their liabilities.

Q. Who Are The Persons Covered By The Guarantee?

Any person or legal entity involved in a project in Jordan with a total private ownership.

Q. Is It A Requirement For The Borrower To Have A Personal Financial Contribution In The Project When He Applies For A Loan?

This matter is left to the discretion of the bank, which evaluates the application. Such a contribution differs among projects according to the type and nature of activity.

Q. Why Aren’t All Documents And Applications Directed To JLGC Rather Than The Bank?

JLGC, through its Counseling Services Unit, studies the project and helps the borrower prepare an economic feasibility study and cash flow analysis and then directs the study and associated documentation to the bank, thus enabling the borrower to receive the needed credit.

Q. What Are JLGC’s Sources Of Revenue?

JLGC receives revenue from its operational transactions, represented by guarantee fees charged to Participating Banks, and from the investment of its liquid funds.

Industrial Modernization Guarantee Programme

Q. What is the purpose of Industrial Modernization Guarantee
     Programme ?

Helping small and medium size industries obtain medium and long term credit facilities from local commercial banks through modern bank financing methods not depending on traditional guarantees and through the assistance of the Euro-Jordanian action for the development of enterprise .   

Q. Who benefits from this program ?

All existing and future enterprises in the private sector with employees between  5 and 250 persons that produce goods and services that complies with employee and environmental safety regulations.

Q. For What purpose are these loans guaranteed  ?

The loans may be for financing the existing or new enterprises’ fixed assets a certain percentage for the working capital

Questions About The Credit Guarantee Programme

Export Credit Guarantee

Q. What Are The Main Features Of The Post-Shipment Export Guarantee Programme?

The post-shipment Export Credit Guarantee provides protection against multiple risks associated with export operations, particularly the commercial risks related to the possibility of losing the value of exports. This Programme is prepared in accordance with a “Partnership Agreement” signed between JLGC and the French Company for External Trade Insurance (COFACE).  Abiding by the procedures detailed below will assist you in receiving the maximum benefit from the export credit guarantee offered by JLGC.

Q. What Is The Credit Ceiling ?

The contract will provide you with a sufficient guarantee for your eligible export operations. JLGC’s responsibility for any loss that occurs with respect to you not receiving the value of your exports is limited by a pre-agreed credit ceiling for each of your clients abroad. This means that you should consider a sufficient credit ceiling to cover the outstanding expected payment amount by each of your clients at the time you export your products to him.

New Clients

When applying for a ceiling determination of a new client, it is necessary to submit all relevant data available in order to assist the evaluation a specific client’s credit-worthiness. Some examples of this data are the client’s commercial dealers, their detailed addresses, the banks they deal with, and your expectations concerning your future business with them.

Existing Clients

While JLGC respects your experience with exiting clients, it must always look at new developments related to your business dealings with them. This is especially apparent when the need arises to modify the credit ceiling or change the settlement clauses.

Moreover, the approved credit ceiling is a “revolving” one (i.e when the credit amount is settled the same amount will be eligible to be used again) and the credit ceiling stays valid unless it is modified or canceled.

In addition, if you decide to stop your business dealings or expect that no dealings will take place with a client, it is necessary to notify JLGC so that they may cancel the specified credit for that client.

Q. What Are The Requirements For Payment Of Guarantee Installments ?

You are required to remit monthly statements to JLGC, specifying the shipments executed during the preceding month. JLGC will then calculate the guarantee fees applicable based on those statements and will send you the claim for payment. You may obtain the aforementioned statement forms from JLGC.

Q. What Are The Procedures Of Delinquent Payment And Claims ?

Extending The Payment Maturity:
If the buyer (purchaser) asks for a delay in payment or for a change in the terms of payment for your exports, JLGC must be notified and supplied with the request accompanied by any background information the exporter may have.

Probability Of Incurring A Loss:
If you suspect that any of your importing clients will fail to fulfill their obligations, you must notify JLGC immediately so that it can offer suggestions concerning the best routes available to insure payment.

Submitting The Claim:
When procedures fail to prevent a guaranteed loss, you can present your claim to JLGC using a specific claim form obtained from JLGC. In order to avoid any delay in the settlement of the claim, please make sure that the forms are completely filled out and that all required documents are enclosed there in.

Indemnification(Recovery):
After settling the claim, it is the exporter’s duty to continue his efforts to obtain payment from the buyer as well as be in continued contact with JLGC explaining all steps being taken.

It is also the exporter’s duty to pass on to JLGC, any amount reimbursed from the buyer. JLGC will then classify these amounts according to the ratios set for the claim settlement.

Q. What Are The Commodities Covered By Our Guarantees?

JLGC covers all goods and services of Jordanian origin exported to buyers abroad.

Q. Does JLGC Cover Limited Risks?

Yes, but our target is to cover the exporter’s total revenues.

Q. What Are The Countries Where JLGC Guarantees Risks?

The list of countries covered is a long one, and is always growing.

Domestic Credit Insurance Programme

Q. What is the purpose of the Domestic Credit Insurance Programme ?

It’s a program that guarantees to local manufacturers and industries or their banks the payment of their sold goods by local buyers.

Q. What are the benefits this programme provides?

This programme provides the Jordanian industrialists with a guarantee of  85 % of the value of goods sold to local buyers, and encourage them to expand their local market.

It assists them in obtaining the necessary financing they need from local banks.

Offers them the financial information about their local customers and their ability to repay their debts.

Q. What Are The benefits to the local buyers ?

This program offers local buyers the  guaranteed commercial credit they need from the local manufacturer with easier credit conditions for their bought goods.

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