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Loan Options
Loan Options
Project Name: Deraya
Just like most of the businesses we at Deraya needed funding for our project, we didn’t have enough funding and needed to find all possible research for financing our project.
After researching all the possible fundings, we came up with the following table:
Table 17: Showing Loan Options Research and Criteria
After researching all these options, we decided to choose Riyadah as a primary funding for Deraya, due to a number of reasons. Firstly, their loan offer covers the requested amount of funds. Secondly, their additional services are excellent and cover all aspects of the project including training sessions, marketing, investment, consultations and business services. To conclude, since it is our first time running a business and conducting the related activities, choosing Riyadah is considered the best option for us and more cost saving.
As a secondary funding for Deraya, we will choose “Monsha’at” because they offer quite similar services and they have reasonable administrative fees and the application process in general is accessible. Furthermore, their additional services suit Deraya’s business needs that includes innovation, support and development.
Research
Research
Business Name: Deraya
Much like most businesses, a certain point comes where some need extra funding, we at Deraya did not have enough funding and need to research all possible options for financing our business. After researching all the possible funding options for our business we came up with the following list:
- 9/10ths¹
They have a strategic partnership with the social development bank and they offer many different services in combination with the financial loan. They offer capital money, media coverage, Reaching investors, office spaces, training and consultation and helping businesses reach specialists.
In return, 9/10ths takes a percentage from the service fees for some period of time. Moreover, 9/10ths has different laws and regulations which are legal issues and applicant conditions.
- Riyadah²
Riyadah is a non-profit company that has a strategic partnership with the social development bank. Reyadh offers several services before and while the business runs. Riyadah offers different training sessions that aim to help applicants write their project plan, run the business, do the marketing activities and develop the business services and product. Reyadah provides financial loans up to 300,000 SAR and takes administrative fees based on the amount of loan starting from 3,000 - 10,000SAR.
- Riyad Bank Project Financing³
Riyad Bank project Financing is a loan arrangement in which the repayment is derived primarily from the future cash flow of the project which is being funded.
With this financing solution, the project's assets, rights, and interests may be held by the bank as collateral until the loan is fully paid back.
Possible to postpone payments until cash is being generated
Available medium to long term
Tranche draw down available when the project requires
Maximize the leverage of the project
- NCB Alahli KAFALAH Program ⁴
It is a collaboration between the Ministry of Finance, represented by the Saudi Industrial Development Fund (SIDF) which aims to promote financing to Small and Medium Enterprises (SMEs) within the Kingdom of Saudi Arabia. Through this program, the bank will offer credit facilities and simultaneously, it will issue a guarantee to the bank, covering up to 1.6 million.
NCB offers Kafalah program financing for Tangible Fixed Assets by helping enterprises to finance their fixed assets such as (buildings, civil work & machinery…etc.) in order to enhance their production capacity. Also, Financing Non-Tangible Fixed Assets by Financing investment in industrial designs, marketing, and innovation…etc.
The maximum finance period for the program is 7 years, however, the period may be extended subject to bank's approval. The finance amount, period and cost will be determined by the bank based on reviews of financial documents.
- Monsha’at ⁵
The objectives of the General Authority for Small and Medium Enterprises “Monsha’at” are to organize, support, develop and sponsor the small-medium sector (SME) in accordance with best global practices, to increase the productivity of these enterprises and increase their contribution to the GDP from 20% to 35% by 2030.
Monsha’at works on developing the SME sector in line with best global practices by supporting programs and projects to promote the cultural and spirit of entrepreneurship and innovation, and diversifying sources of financial support for SMEs, and stimulating venture capital initiatives, setting policies and standards for financing projects classified as small and medium enterprises.
An initiative that Monsha’at in cooperation with the Social Development Bank offers to open new options for lending to SME through approved financing companies in the Kingdom, to provide competitive financing solutions and tools for entrepreneurs and small enterprises. Also, to support the small and medium enterprises sector to ensure the continuity of these facilities.
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