Qatar Central Bank eases access to financing for small and medium businesses

Qatar Central Bank (QCB) has issued new regulations aimed at making it easier for Micro, Small and Medium Enterprises (MSMEs) in Qatar to access financing using their point-of-sale and verified electronic payment revenues.

The regulations form part of Qatar's Third Financial Sector Strategy and are intended to strengthen financial inclusion while giving smaller businesses greater access to funding.

How will the new financing system work?

Under the new framework, banks may assess financing for MSMEs based on verified revenues generated by the business.

These revenues can include sales processed through point-of-sale (POS) devices as well as other verified electronic payment channels within Qatar.

Importantly, POS revenues do not necessarily have to come through a terminal provided by the bank offering the financing. Revenues generated through POS devices provided by other banks may also be considered, provided they can be verified.

Other electronic payment revenue streams can also be used where the income can be substantiated.

Financing of up to 30% of annual revenues

One of the main controls introduced by QCB is a maximum financing limit equivalent to 30% of the business's average total annual revenues.

For example, if an eligible business records average annual revenues of QAR 1 million, the 30% regulatory ceiling would be equivalent to QAR 300,000.

This does not mean that every business will automatically receive financing equal to 30% of its revenue. Financing remains subject to the applicable requirements, assessment and controls of the financing institution.

Repayment period of up to two years

The regulations allow a repayment period of up to two years.

This period may include a grace period of up to six months, subject to the applicable financing arrangements and regulatory requirements.

Easier collateral and faster approvals

The new rules are designed to facilitate access to credit by easing collateral requirements traditionally associated with business financing.

They are also intended to speed up credit approval procedures by allowing lenders to use verified business revenue as an important source for assessing repayment capacity.

Rather than relying solely on traditional collateral, banks can consider the actual electronic revenues generated by the business.

What does this mean for small businesses in Qatar?

For businesses that generate regular sales through POS terminals and other verified digital payment methods, the regulations could provide an additional route to securing working capital or financing for expansion.

The framework could be particularly relevant to retail businesses, restaurants, cafés, service providers and other MSMEs with a consistent record of electronic sales.

QCB said the regulations are intended to encourage MSMEs to expand their activities while introducing controls that protect both financing institutions and customers.

The initiative forms part of Qatar Central Bank's wider efforts to strengthen financial inclusion and develop the country's financial sector under the Third Financial Sector Strategy.

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