SME Lending in Afghanistan

Small and Medium Enterprises in Afghanistan are considered as those enterprises that employ 10 to 250 employees, sales turnover up to US$ 1 million and paid-in capital of up to US$ 1 million. The lenders in the country are banks, financing companies, some MFIs, local money exchange service providers (Hawala dealers), credit unions and societies. Most of these loans are disbursed against security collateral of title DEEDS, land deeds, property and automobile deeds and some of the rest of Small loans are lent against the social securities neighbors, personal guarantees and character.

The SME loans that are disbursed by these lenders range from US$ 2,000.00 to US$ 250,000.00 depending on the investment plans, client requests, capacity, credit history and collateral.

Majority of the SMEs exist in the central and regional main cities like Kabul, Mazar-e-Sharif, Herat, Kandahar, Ghazni, Jalalabad, Kunduz, Faizabad, Maimana, JawzJan and Taloqan.

Interest rates are marked from 12% up to 24% depending on mutual deals, loan amounts, credit history etc. Almost all the formal lenders charge 0.5% to 2.0% of the loan amount as processing fee up-front.