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SMBDA: "New preferential loans create additional opportunities for SMBs" 30.07.20

The new preferential lending schemes will provide support to entrepreneurs affected by the coronavirus pandemic, especially micro, small and medium businesses, insuring businesses from the additional difficulties caused by credit liabilities, and reduce the financial burden of entrepreneurs in this area. These measures will also have a positive impact on the further expansion of access to finance for SMBs and the growth of investment activity.”

Mr. Orkhan Mammadov, Chairman of the Board of the Small and Medium Business Development Agency (SMBDA), commented on the importance of new soft loans in financing entrepreneurship, especially micro, small and medium-sized enterprises, says "Report" media outlet.

"New preferential lending schemes create additional opportunities for financing SMBs. Thus, the greatest difficulty faced by entrepreneurs during the loan transaction is related to the collateral. Small entrepreneurs have comparatively more limited opportunities to use a collateral. One of the advantages of the new lending scheme is that an entrepreneur who takes a preferential loan to buy equipment will be able to put this equipment as collateral in the absence of real estate. Within this mechanism, the banks' interest rate will be 7% per annum. This will further expand access to the financial resources of businesses, especially small entrepreneurs who have no access to collateral, as well as significantly contribute to the support of economic growth and employment," he said.

O. Mammadov said that the new preferential lending schemes also take into account the areas of agriculture that require long-term credit investments: “one of the main sectors where micro and small entrepreneurs operate is agriculture. Areas such as tea-growing and gardening are areas that need long-term credit investments. In such areas, the loan period for small loans has been increased from 3 to 5 years, medium loans from 5 to 7 years, and half of the loan period has been defined as a grace period. This will allow small and medium-sized entrepreneurs operating in the agriculture sector to receive higher income and pay off the loan interest from their earnings.”

As for the provision of state guarantees and interest subsidies for loans with new preferential loans, the chairman of the SMBDA said that up to 60% of the new business loan portfolio of 500 million manats is guaranteed by the state, as well as 50% of the annual interest rate of these loans are likewise financed by the state. The term of this policy applies to loans up to 3 years with an annual interest rate of not more than 15%. The grace period for these loans is up to 12 months. The provision of state guarantees for 60% of loans and the subsidization of interest allow SMBs to implement more projects.

The electronic Credit Platform for business entities to benefit from new lending schemes (www.e-edf.gov.az) allows entrepreneurs to obtain preferential loans in a short period of time. The Electronic Credit Platform also minimizes contact between the parties, saves time and costs, allows you to monitor the credit process online at every step, Mr. Mammadov stressed.