Kafalah SME Financing Guarantee Program
Provides Saudi banks and lenders with government guarantees so small and medium companies can obtain loans without collateral.
The Kafalah SME Financing Guarantee Program is operated by Monsha'at (Saudi General Authority for Small and Medium Enterprises) in partnership with financial institutions regulated under the Saudi Central Bank (SAMA). Kafalah provides loan guarantees covering up to 90 percent of the financing value extended by cooperating banks and NBFIs to eligible Saudi SMEs. The guarantee enables lenders to extend credit to businesses that lack the collateral or credit history typically required for commercial lending. Guarantee ceilings are SAR 2.5 million for micro-enterprises, SAR 5 million for small enterprises, and SAR 15 million for medium enterprises.
Since the program's current structure was established in 2020, Kafalah has issued over 64,000 guarantees with a total value of SAR 72.5 billion, supporting more than 23,000 enterprises, contributing approximately SAR 27 billion to Saudi GDP, and facilitating nearly one million jobs. Applications are submitted directly through cooperating financial institutions or the SME Bank's digital finance portal — Monsha'at does not lend directly. Processing time has been reduced from 48 working days to 36 hours through AI-powered review workflows. A King Fahd University of Petroleum and Minerals study found that Kafalah-supported enterprises achieved 17.3 percent higher employment growth than comparable enterprises using traditional financing.
Any Saudi-registered SME that does not meet the collateral requirements of its target bank may qualify if the business plan, revenue projections, and legal structure satisfy the underwriting criteria of the cooperating lender. Kafalah is sector-agnostic: eligible industries include retail, food, manufacturing, health, entertainment, and technology. In the entertainment sector specifically, Q2 2025 saw a 98 percent year-over-year increase in Kafalah-backed financing, with SAR 79 million in guarantees issued in a single quarter. The guarantee is not a direct cash transfer; the principal remains the obligation of the borrowing enterprise.
Guarantees up to 90 percent of SME financing through cooperating Saudi banks, enabling micro, small, and medium enterprises to access loans of up to SAR 15 million without traditional collateral.
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