August 20, 2026
Many small and medium enterprise owners have promising ideas, but run into one obstacle that blocks their access to financing: the inability to provide the collateral lenders require. This is where the government-backed Kafalah program comes in, designed specifically to solve this problem. This article explains what the Kafalah program is, how it works, and who benefits from it.
The Kafalah program helps small and medium enterprises secure financing by issuing a guarantee to the financing provider on the enterprise's behalf, allowing it to obtain financing even without sufficient collateral. The program gives eligible enterprises access to corporate and SME financing solutions for various needs, such as working capital, business expansion, and purchasing assets and equipment, subject to the terms and conditions of both the program and the financing provider.
The Kafalah program aims to help SMEs obtain the financing needed to develop and expand their activities, and to encourage financial institutions to engage with this sector, alongside attracting a new group of enterprise owners who haven't previously dealt with financing providers. The program also seeks to develop economically less-active provinces and strengthen SMEs' role in creating new jobs, in support of Saudi Vision 2030.
After an enterprise submits a financing application to a provider participating in the program, and once the financing is approved, the financing provider itself applies to the Kafalah program to issue a guarantee for that financing, accompanied by written approval from the business owner accepting the program's guarantee. This way, the program absorbs part of the credit risk instead of leaving it entirely with the financing provider.
The Kafalah program offers a government guarantee of up to 90% of the financing value. This high coverage ratio makes financing providers more willing to accept applications from enterprises that lack sufficient real estate collateral.
The program covers multiple sectors, including education, tourism and entertainment, construction, medical services, trade, contracting services, transport and communications, and information technology, among others, though final eligibility depends on credit criteria under both the program's and the financing provider's terms.
The Kafalah program benefits owners of micro, small, and medium enterprises, including startups, whether Saudi or non-Saudi, helping them secure financing and supporting their growth and expansion, subject to the terms and conditions of both the program and the financing provider. General eligibility criteria include that the business be economically and financially viable, and that the enterprise contribute to employing and training Saudi talent, supporting local content, and replacing products with national alternatives.
Kafalah-guaranteed financing gives enterprises access to multiple solutions based on their needs, such as working capital, business expansion, and asset or equipment purchases, depending on the product type and the financing provider's terms. The guarantee coverage ratio and guarantee value also vary by product: some products offer coverage of up to 90% of the financing value, while others may reach higher ratios depending on the product and sector.
Amlak International offers Kafalah financing structured in a Shariah-compliant way, with a government guarantee of up to 90%. The indicative annual rate for the Kafalah Tawarruq product ranges between 16% and 18%, with administrative fees of up to 1.5% plus VAT, which may vary depending on the financing amount, term, and credit score. The financing amount is determined based on the enterprise's credit records and the collateral available, with a dedicated relationship manager following up throughout the financing period. You can apply through reaching out to us or by visiting your nearest branch for more details on the program.
The Kafalah program is an effective government solution to one of the biggest obstacles to SME financing: the lack of collateral. With a government guarantee of up to 90%, the program opens the door for a wide range of entrepreneurs and startups to obtain the financing they need to grow, whether Saudi-owned or owned by residents.
The Kafalah program falls under the SME Bank, one of the National Development Fund's affiliated companies in Saudi Arabia.
Not necessarily. One of the program's biggest advantages is that it often doesn't require real estate collateral, thanks to the government guarantee that covers a large part of the financing.
The government guarantee offered through the program reaches up to 90% of the financing value, depending on the financing provider's policy and the specific application.
Yes, the program was designed to include startups alongside established enterprises, to help them grow and expand.
Yes, an enterprise can combine Kafalah financing with other funding sources, subject to the financing providers' policies and requirements and the limits set by the Kafalah program.
Yes, enterprises owned by Saudis and residents can benefit from the Kafalah program, subject to the program's terms and requirements.