BAKU, Azerbaijan, July 31
By Eldar Janashvili – Trend:
New mechanisms of preferential lending will support entrepreneurs, micro, small and medium-sized enterprises (SMEs) affected by the COVID-19 pandemic in Azerbaijan, Chairman of the Board of the Small and Medium Business Development Agency under the Ministry of Economy Orkhan Mammadov said, Trend reports.
"These mechanisms will insure businesses are protected against additional problems that may create loan obligations, and will ease the financial burden of entrepreneurs. They will also have a positive effect on further expanding the opportunities for SMEs to access financial resources and increase investment activity," Mammadov noted.
"These mechanisms create additional opportunities for financing SMEs’ facilities. So, when receiving a loan, the biggest difficulty arisen for entrepreneurs is the collateral. Small entrepreneurs’ opportunities for collateral are more limited," he said.
"One of the advantages of the new lending mechanism is that in the absence of real estate, an entrepreneur who receives a soft loan to purchase equipment can pledge it as collateral. The annual bank interest under this mechanism is 7 percent," he added.
Mammadov said that this mechanism will expand the opportunities for business entities, in particular, small entrepreneurs who do not have collateral opportunities, to financial resources, and will also make a significant contribution to supporting economic growth and employment.
"Those spheres of agriculture that require long-term crediting are also covered by these mechanisms. Tea growing, horticulture - these are areas in need of long-term crediting. In these areas, the terms for small loans have been increased from 3 to 5 years, for medium-sized loans - from 5 to 7 years, half of the loan term is set as a grace period," the chairman noted.
"As for the state guarantee of loans and subsidizing the interest of new mechanisms of preferential lending, the chairman said that the state guarantees a part of up to 60 percent of the business loan portfolio in the amount of 500 million manat ($294.1 million). Also, 50 percent of the annual interest rate of these loans is financed by the state. This mechanism applies to loans for a period of up to 3 years, the annual interest rate of which is not higher than 15 percent. The grace period for these loans is up to 12 months," he said.
"The provision of a state guarantee for 60 percent of loans and interest subsidizing allow SMEs to implement even more projects. For the comfortable use of new lending mechanisms, the Electronic Credit Platform (www.e-edf.gov.az) has been launched, which allows entrepreneurs to receive preferential loans," Mammadov added.
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