By Tom Arnold and Hadeel Al Sayegh

DUBAI, Sept 20 (Reuters) - Saudi Binladin Group (SBG) has requested a second extension on an 817 million riyal ($217.9 million) Islamic loan being used to fund construction at the kingdom's Grand Mosque, sources aware of the matter said.

The talks to delay the loan repayment, originally due to mature on July 15, came after the Saudi government failed to fully reimburse the construction firm for work at Islam's holiest location, the sources said on condition of anonymity.

It is the second time SBG has sought more time to meet the payment, having previously requested an extension to Aug. 31.

The Binladin Group could not be reached for comment about the loan, which is a murabaha facility, or a cost-plus-profit arrangement compliant with Islamic financing standards.

The Saudi Ministry of Finance declined to comment.

Two of the sources said the government had paid SBG a small portion of the amount it owed for the Grand Mosque project before the Eid al-Adha Islamic holiday this month but a large amount remained outstanding.

The firm has been the leading builder in the kingdom for several years, delivering a number of major buildings including the expansion of the Grand Mosque in Mecca, which houses the Kaaba, the structure to which Muslims face while praying.

But SBG's lofty status has come under threat from government spending cuts, economic reforms and its temporary suspension from new state contracts after a crane accident killed 107 people at the Grand Mosque last year.

The ban on SBG was lifted in May but a cash squeeze has left it struggling under an estimated $30 billion in debt owed to local and international lenders, an amount large enough to cause potential stress for the Saudi banking system.

The 817 million riyal loan was from a consortium of 8 to 9 lenders, mainly from the United Arab Emirates. Dubai Islamic Bank led the facility and Emirates NBD , Noor Bank and Ajman Bank participated, said the sources.

Sources told Reuters in July that SBG had 1.071 billion riyals of approved payments on work completed on the project up until December 2015 which the Saudi government had yet to pay.

It had since filed a further 1.3 billion riyals of claims for work covering the period January-April 2016, for which approval is still needed, the sources said in July.

In lieu of these receivables being paid, the builder asked banks to accept an extension to Aug. 31. But when the government failed to pay up in full, the company has once again asked lenders for more time, the sources said.

Two of the sources said it was uncertain how long the latest extension would be, but one said it could be until December. ($1 = 3.7496 riyals)

(Additional Reporting by Katie Paul in Riyadh; editing by David Clarke) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))