New fund to finance innovative startups

Project backed by BDL, Chamber of Commerce

The Chamber of Commerce, Industry, and Agriculture of Beirut and Mount Lebanon (CCIA-BML) launched FARO Lebanon, a fund dedicated to supporting innovative small and medium-sized enterprises (SMEs). The fund will provide financial support for innovative projects, enhancing competitiveness and openness to global markets.

FARO Lebanon will extend soft loans of up to $20,000 to SMEs, at a maximum of one percent interest. Repayment periods could stretch over three years.

The fund will have a starting budget of $500,000. Mohamad Choucair, Head of the CCIA-BML, said the fund’s equity will be increased gradually. “We are also expecting a grant from the European Union worth €1 million ($1.3 million) in 2013,” Choucair said. He said the grant will be distributed as giveaway support to SMEs.

In order to be eligible for FARO Lebanon’s support, enterprises should present an innovative product or service, an innovative way to deliver a product or service, or an innovative business model. Candidates should also have at least one partner from a European or Mediterranean country. “We will help enterprises find partners from these countries, thus improving their growth prospects in these markets,” Choucair said. The fund could help companies prepare financial statements and business plans. It could also offer technical support tailored to each company's needs.

FARO Lebanon takes its name from the French concept 'Fonds d’Amorçage de Réalisation et d’Orientation'. The fund was established within the framework of the Union for the Mediterranean. As the president of the Association of Mediterranean Chambers of Commerce and Industry (ASCAME), Choucair is closely involved with running the fund.

FARO Lebanon is supported by the Central Bank (BDL) and will be managed by a Board of Trustees comprising representatives from public and private institutions and chaired by Choucair. "Board members include representatives from the BDL, KAFALAT, the Association of Banks in Lebanon (ABL), Berytech, the Ministry of Economy and Trade, the Ministry of Finance, the Prime Minister’s office, and the President of the Republic’s office," said Lana El Tabch, economic researcher at the Center for Economic Research (CER) of the CCIA-BML.

The CER constitutes the first interface of the fund with the applicant. It will study applications and make the relevant recommendations to the Board of Trustees which will make the final decision. "In order to fulfill this task in a professional manner, the center intends to rely on a software-based lending assessment numerical algorithm (a tool combining a number of criteria)," Tabch said. The tool is currently in its final stages of development. "(This will) help us reach a justifiable recommendation to the Board of Trustees regarding the granting of a loan," she said.The tool is based on more than 140 criteria but not all of these identified criteria could apply to all applicants, Tabch said.

Another aspect of the CER's responsibility within the FARO Lebanon framework is detecting the areas in which an applicant needs support. "This assistance includes preparing elements of a business plan and feasibility study, helping develop financial projections, and preparing financial statements," said Tabch.