Regulation of the financing of hotel and tourism projects.

Regulations of the program

Requirements for obtaining the loan

• The investor must be a Saudi natural or legal person.
• The project must meet all the general and special conditions and specifications specified by the competent authorities and the availability of public services on the site.
• The company's capital specified in the memorandum of association shall be the basis for financing so that the company's capital at the time of providing the loan or obtaining approval is not less than (25%) of the estimated investment costs of the project if it is under establishment, while for existing companies, the financing structure shall be (40% equity and 60% financing)
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• Lending is limited to projects in less developed cities or governorates that are characterized by tourism attractions and new tourist destinations with a population of less than one million according to the latest statistics of the Department of Statistics.
• If the project is to be built on land owned by the investor, the land and buildings of the project shall be mortgaged or a bank guarantee equal to the value of the loan, provided that the bank guarantee is valid until the loan is fulfilled and its value is reduced equal to the paid installments of the loan value.
• If the project is to be built on land not owned by the investor, the mortgage must be for another property whose assessed value is 30% more than the value of the loan or provide a bank guarantee equal to the value of the loan.
• If the project to be financed is within the third paragraph of the scope of lending (heritage hotels), a bank guarantee must be provided against the loan.

Lending Conditions:

• Lending is limited to projects that are planned to be constructed or whose implementation rate has not exceeded 50% of the project buildings without the existing ones. The beneficiary - if he does not violate the financing conditions - has the right to obtain additional financing to expand the project not exceeding (50%) of the current financing amount after paying (70%) of the financing amount on a regular basis and providing all documents required to be submitted to the Ministry of Finance and the necessary guarantees.
• If the investor does not start implementing the project within one year from the date of the loan contract, the loan will be canceled unless there is a convincing justification for the reasons for the delay.
• The investor may not change the implementation or operation plan of the project without the approval of the Ministry of Finance and the General Authority for Tourism and National Heritage.

Documents required for the loan:

Application is done through the Saudi Commission for Tourism and National Heritage (General Directorate for Tourism Investment), through:

• Providing documents that prove the solvency of the investor (individual/company) and his/her ability to complete and operate the project.
• Economic feasibility study of the project prepared and approved by a licensed office.
• A copy of the title deed of the land on which the project will be built or its lease contract if the project land is leased, provided that the lease period is not less than the loan repayment period, with a map of the site attached.
• Engineering plans for the project approved by a licensed engineering office and certified by the Municipality and the General Authority for Tourism and National Heritage.
• A copy of the project's building license from the Municipality.
• Technical specifications approved by the engineering office designing the project.
• Lists of equipment, fixtures and furniture expected for the project with a brief description of each item, and a copy of their quotations.
• Sign a pledge to provide a certificate from the labor office to comply with the Saudization rate in the project during the actual operation of the project.

Loan Value

The loan shall be allocated to finance buildings, facilities, equipment, fixtures and furniture so that the amount allocated for equipment, fixtures and furniture does not exceed (20%) of the loan, and the maximum loan including buildings, fixtures and furniture shall be equivalent to (50%) of the estimated cost approved by the Ministry of Finance for the entire project and not exceed (100) million riyals.

Evaluation of the loan application

After the investor submits the loan application, the application is evaluated through the following:

After the investor submits the loan application, the application is evaluated through the following:

• The Investment Department at the Saudi Commission for Tourism and National Heritage conducts a preliminary study of the project costs based on the information, documents and documents attached to the application.
• The site of each project is visited by a committee from the Ministry of Finance and the General Authority for Tourism and National Heritage to confirm the location of the project and that the percentage of completion in the project did not exceed 50% of all buildings according to the completion evaluation form approved by the Ministry of Finance.
• The application is sent to the General Directorate of Local Loans and Subsidies at the Ministry of Finance to be reviewed and studied by the Borrowing Applications Review and Study Committee and then approved.

Disbursement of the loan

The amount allocated for the buildings is disbursed in ten installments at a rate of 10% per installment. These payments are disbursed based on an inspection report by a committee formed by the Ministry of Finance with the participation of a member of the Saudi Commission for Tourism and National Heritage after the investor submits the report of the consultant supervising the project, and the Ministry of Finance has the right to stop the disbursement of loan payments if it proves that the investor is in breach of his obligations in the loan contract.

B. The amount allocated for equipment, fixtures and furniture will be disbursed as follows:

B- The amount allocated for equipment, fixtures and furniture will be disbursed as follows:

A first payment of (25%) of the allocated amount after submitting documents and supporting documents to secure them (contract, invoice, supplier's or exporter's receipt, import credit statement) provided that (60%) or more of the construction and architectural works in the project building have been completed.

B. A second payment of (50%) of the amount allocated to it after the completion of the entire project building, full delivery to the project site and installation of (50%) of it...

Third payment of (50%) of the amount allocated to it. A third payment of (25%) of the loan amount allocated to it upon completion of its installation and the application of its lists on the ground by the inspection committee of the Ministry of Finance.

Loan Repayment

The amount disbursed from the loan is repaid in ten equal annual installments, the first installment of which is due four years after the date of the loan contract.

From Amlak

It is worth mentioning that the Saudi Commission for Tourism and National Heritage has put the controls and forms of the program on its website (www.scta.gov.sa)