The MEII Loan Guarantee Facility (LGF) offers the needed backing for banks in the West Bank and Gaza to increase lending to small and medium-sized businesses in a variety of sectors including textiles, garments, furniture, processed food, stone, marble and pharmaceuticals. Critical support for the facility is provided by the government of Norway, the Portland Trust, and individuals contributing on a significant level. CHF International serves as the local agent for the facility, conducting due diligence on local banks, providing technical assistance to loan officers, and reviewing loan proposals for guarantees. It is estimated that loans approved by the end of 2008 will generate at least 2,692 new jobs through a combination of new hiring by LGF beneficiaries and downstream expenditures on local procurement. Since the LGF provides $160 million in guarantees, backing 70% of possible loan amount, over the medium term, LGF will guarantee $228 million in loans, generating tens of thousands of local jobs.
MEII's LGF provides technical assistance to participating banks to develop new loan products and lending systems. This includes helping banks improve their ability to evaluate potential borrowers and business plans, as well as the quality of their credit underwriting procedures. It also assists in such critical areas as marketing and outreach to Palestinian businesses, including women-owned businesses; portfolio management (i.e., loan disbursement procedures, repayment monitoring, and arrears management); and new product development.
LGF conducts its own credit and risk analysis on loan proposals submitted by local banks for LGF guarantees. The LGF staff works closely with loan officers to ensure appropriate and complete documentation and to offer technical assistance for analyzing the credit and businesses risks associated with project proposals. This close working relationship is contributing to higher standards of credit analysis for commercial lending in the region.
LGF supports loans across a variety of economic sectors and seeks to diversify its support geographically to bring economic benefits to as many communities as possible. Loan proceeds are being utilized for the following purposes:
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