This report presents the results of a research study started in late 2014 by the Sanad Fund for MSME’s Technical Assistance Facility and CGAP to confirm or refute indications of cross- and over-indebtedness of microfinance borrowers in Lebanon. The study included an analysis of loan and income data for 1,200 microfinance institution (MFI) borrowers, verified against the Central Bank’s credit registry.

The study found that 29% of borrowers were simultaneously repaying loans to two institutions or more, and that 19% of clients were in fact banked, repaying loans to an MFI and a bank. The study also evidenced that a third of borrowers spend over 50% of their net income servicing debt, with 10% being insolvent. Loan repayment remained however satisfactory overall, and MFIs did not appear to relax underwriting procedures. The study did not cover all formal and informal lending sources, so actual levels of cross- and multiple borrowing might be higher.

Based on these findings, the report calls for coordinated efforts to monitor indebtedness levels on a regular basis, and offers opportunities for further research to better understand borrowing patterns and debt burdens of Lebanon’s low-income borrowers.