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The Portland Trust is committed to promoting peace and stability between Palestinians and Israelis through economic development.

Loan Guarantee Scheme

A study by The Portland Trust identified that Small and Medium-sized Enterprises (SMEs) were one of the driving forces behind the Palestinian economy and were more resilient in the face of the conflict and the political uncertainty than other sectors. But they faced enormous hurdles in accessing finance. The banks were reluctant to lend finance because of the risks involved. These risks translated into high collateral requirements on the part of the SMEs.

The Portland Trust looked at ways of underwriting lending. The Portland Trust worked closely with the Aspen Institute, the US Overseas Private Investment Corporation (OPIC) and the Palestine Investment Fund (PIF) to design a Palestinian loan guarantee facility to encourage banks to extend credit and boost the provision of affordable finance for Palestinian small and medium enterprises. A $160m facility was launched in July 2007, with $50m from PIF and $110m from OPIC. The scheme guarantees loans up to a total of $228m. Loans from $10,000 to $500,000 are backed by a 70% guarantee.

To see the latest update on the scheme's activities, please click here.

The scheme targets a range of businesses and includes a technical assistance
programme to help banks market their financial products more successfully. Samir Hulileh sits on the Loan Guarantee’s advisory board working to maximise its impact. The Portland Trust contributed financially to the scheme’s running costs
in 2008.

The Portland Trust also engaged European finances for loan guarantees through a
combination of lobbying and analytical work that demonstrated the potential demand. The European Investment Bank and European Commission jointly provided an additional €24m for loan guarantees which was combined with €5m of funding from the German Development Bank, KfW. The €29m European-Palestinian Credit Guarantee Fund was launched in 2006.

For more information:

Financing Palestinian SMEs
OPIC
ASPEN Institute