BAKU, Azerbaijan, June 15
By Nargiz Ismayilova – Trend:
The Azerbaijani Entrepreneurship Development Fund made amendments in its charter and rules of issuing soft loans, Deputy Chairman of the fund’s Board Arif Valimammadov told Trend.
According to the deputy chairman, the changes were made in accordance with a corresponding decree of Azerbaijan’s president of June 4, 2020, and one of the main changes concerns the use of new mechanisms for issuing loans.
"As it’s known, one of the main difficulties the entrepreneurs faced was the inability to obtain loans without sufficient financial resources to do this.
According to the new changes, if an entrepreneur wants to take loans to purchase new production equipment, the banks will issue the loans on the security of this equipment. This will allow receiving soft loans in a short time without the necessity of making additional collaterals," he said.
Valimammadov pointed out that another change in the rules for issuing loans concerns the lending period for small and medium-sized enterprises.
He reminded that small loans (from 5,000 manat that is $2,947 to 50,000 manat that is $29,472) are allocated for a period of up to three years, and medium loans from 50,000 manat to 1 million manat ($589,400) for a period of 1 year,” he also noted.
“Due to the fact that the return period in such cases is very long, the investments made in some sectors, especially in the development of agriculture - the development of tea growing and the creation of new orchards - did not pay off. Entrepreneurs were unable to use soft loans and, without receiving benefits, had to repay loans at their own expense without income.”
“Given this, the periods for issuing loans have been changed. Loans will be issued for a longer period, respectively, for five and seven years," he said.
According to him, changes in the charter of the Entrepreneurship Development Fund also are related to the provision of the possibility of issuing state guarantees and subsidies for the allocation of loans.
“The new mechanism enables the fund to provide a state guarantee for 60 percent of loans worth 500 million manat [$294.7 million]. These loans will be issued for three years, with the possibility of a grace period of up to 12 months. The maximum interest rate on such loans will be 15 percent, of which half (7.5 percent) will be subsidized by the fund," Valimammadov said.
In 2019, the fund issued loans in the total amount of 175 million manat ($103 million). The loans were used by 1573 entrepreneurs, he added.
“These loans are soft, and the maximum rate of these loans is 5 percent, of which one percent is related to the yield of the fund, and 4 percent - to a bank’s income. These loans, depending on the amount, are issued for a period of three to 10 years,” he noted.
"The loans are divided into three parts by their volume. Small loans from 5,000 manat [$2,947] to 50,000 manat [$29,472] are issued for a period of up to three years, medium loans (from 50,000 manat to 1 million manat [$589,400]) for a period of 1 year, and big loans from one to 10 million manat [$58,940] are issued for a period of 10 years. Half of the period for which the loans are issued isgrace, and during it, the entrepreneurs pay only interest on the loans. Starting from the second period, the entrepreneurs should return fixed assets on the loans.”
“Over the past period of 2020, loans totaling 50.4 million manat [$29.7 million] were issued by the Entrepreneurship Development Fund, and more than 335 entrepreneurs used the loans. The main areas in which loans were issued are the development of agriculture, processing industry and production," he added.
According to him, the fund plans to restructure loans worth about 1 billion manat ($589.4 million).
“As of now, the creation of an electronic platform is being underway, with the help of which entrepreneurs will be able to take advantage of guarantees and subsidies on loans in a short time. The platform is currently being tested,” the deputy chairman also added.
(1 USD = 1.7 AZN on June 15)
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