Jordan Loan Guarantee Corporation proves valuable for entrepreneurs, SMEs

AMMAN — Loan guarantees offered by Jordan Loan Guarantee Corporation (JLGC) seem to be gaining momentum as they were in high demand last year.

According to the JLGC's 21st annual report, the outstanding guaranteed portfolio at the end of 2014 was valued at JD64.6 million spread over 3,599 credits.

At the end of 2013, the guaranteed value was JD59.1 million spread over 3,306 credits.

Of the outstanding balance at the end of last year, JD36.1 million in guaranteed value covered 1,826 productive credits under the small- and medium-sized enterprises’ (SMEs) loan guarantee programme. 

The remaining JD28.5 million were in guarantees for 1,773 beneficiaries from real estate and personal loans.

JLGC Chairman Maher "Al Sheikh Hassan" told the shareholders in an annual report's foreword that productive projects carried out by SMEs benefited last year from financial guarantees extended to 824 loans, carrying a JD32 million nominal value. 

Sheikh Hassan, who is the deputy governor of the Central Bank of Jordan, indicated that under the export and domestic credit  guarantee programmes, JLGC also covered 1,219 shipments with a value in excess of  JD52 million.  

In  a breakdown of the latter facility, JLGC General Manager Mohammed Al Jafari mentioned that guarantees valued at JD47 million  were spread over 794 export shipments, and others valued at around JD5 million were spread over 425 domestic sales.

Tables highlighting operational activities and results  showed that the amount outstanding of loan guarantees at the end of 2014 was JD19.7 million, 98.35 per cent of the JD20 million ceiling provided under the "productive programmes/small enterprises" category.

At the end of 2013, the outstanding amount was JD13.65 million or 73.8 per cent of the JD18.5 million ceiling.

In terms of number of loans, the amount last year  was spread over 1,647 borrowers compared with 1,205 beneficiaries in 2013. 

Under the second category, named "real estate and housing programmes/personal", the performance was lower as the outstanding amount declined from JD30.8 million at the end of 2012, or 76.8 per cent of the JD40.1 million ceiling to JD28.6 million or 75.3 per cent of the JD37.9 million ceiling.

In terms of number of loans, the amount was spread over 1,944 beneficiaries in 2013 compared with 1,773 beneficiaries in 2014.

Combining both categories, outstanding loan guarantees stood at JD48.2 million at the end of last year, or 83.2 per cent of the JD57.95 million ceiling.

On December 31, 2013, the combined outstanding amount was JD44.4 million, 75.9 per cent of the JD58.55 million ceiling.

Beside those facilities, the corporation operates a loan guarantee portfolio earmarked for industrial financing. 

The outstanding value under this facility at the end of last year was JD16.4 million spread over 179 borrowers compared with JD14.7 million spread over 157 borrowers in 2013. 

The guarantees for  industrial financing last year totalled JD4.5 million to 26 entrepreneurs, 34.3 per cent higher than the JD3.3 million in 2013 to 22 beneficiaries.

Jafari pointed out that the banks participating in the transactions submitted last year claims amounting to JD530,000 for compensation on bad loans. In 2013, bank claims for reimbursement totalled JD766,000. 

The general manager said in the annual report that compensation paid by JLGC in 2014 in lieu of bad loans amounted to around JD307,000, lower than the JD332,000 paid in reimbursements in the previous year.

JLGC recouped JD354,000 last year compared with more than JD129,000 recovered in 2013.

"To encourage operational sustainability for small- and medium-sized entrepreneurs, and in consideration of the business circumstances and environment in the Kingdom in 2014, the door was opened to reschedule  some indebtedness," Jafari said in the report.

He indicated that JD5.4 million in guaranteed loans were rescheduled  compared with JD3.3 million in 2013. 

Financially, the report showed that gross earnings went up in 2014 by 4.9 per cent to JD1.75 million compared with JD1.7 million at the end of the previous year.

"The increase was due to higher operational income which rose from JD843,000 in 2013 to JD874,000 last year, and to growth in investment earnings which went up from JD829,000 to JD879,000," the report indicated.

According to the balance sheet as of December 31, 2014, JLGC generated JD420,336 net profit slightly higher than the JD419,696 posted at the end of the previous year.

The balance sheet showed shareholders' equity at JD14.5 million, and total assets at JD25.9 million.

The annual report shows that the corporation is active in channelling donor funds to SMEs in cooperation with the Central Bank of Jordan, the Ministry of Planning and the Development and Employment Fund, among others.

The Central Bank of Jordan, the Cities and Villages Development Bank, the Social Security Corporation were JLGC's main shareholders at the end of last year as they owned 47.75 per cent, 5.25 per cent and 5.24 per cent respectively of its JD10 million capital.