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01.07.2020 / Important events
Online Credit Platform

As it is known, the Decree of the President of the Republic of Azerbaijan dated June 4, 2020 approved the Procedure for making concessional loans through the funds of the Entrepreneurship Development Fund of the Republic of Azerbaijan and amendments were made to the Charter of the Fund.

According to the new changes, new mechanisms of preferential lending to entrepreneurship start to be applied by the Entrepreneurship Development Fund of the Ministry of Economy. One of these mechanisms is the provision of soft loans for the purchase of equipment in order to create access to soft loans for entrepreneurs without the requirement of real estate collateral. The essence of the mechanism is that the soft loan is used to purchase new equipment, which is also taken as collateral. The interest rate for banks under this mechanism is 7%. The new mechanism will make a significant contribution to further expanding access to finance for businesses, supporting investment activity, economic growth as well as employment.

In addition, in areas requiring long-term investment in agriculture (e.g, tea, horticulture, etc.), the loan term for small-sized loans has now been increased from 3 to 5 years, for medium-sized loans from 5 to 7 years, as well as half of the overall loan period has been defined as a grace period.The main purpose of the mechanism is to reduce credit risks and increase access to soft loans for small and medium entrepreneurs.

Another approved mechanism is the restructuring of credit institutions' debt to the Fund, if necessary, in accordance with the procedure established by the Supervisory Board of the Entrepreneurship Development Fund due to changes in circumstances as a result of force majeure impacts (natural disasters, epidemics, etc.).

The decree made additions and changes to the charter of the Entrepreneurship Development Fund, whereby adding providing state guarantees and subsidies to its activities.

Meanwhile, mechanisms have been launched to provide state guarantees to entrepreneurs for their new loans and subsidize interest on these loans, as well as to finance part of the loan interest of entrepreneurs with existing loans. Thus, in order to increase investment in the non-oil sector and access to financial resources for private sector businesses, as well as to minimize the impact of the coronavirus pandemic on the business environment and economic activity, existing financial mechanisms will be expanded and additional support tools will be introduced.

In accordance with the mechanism of providing state guarantees for business loans as well as interest subsidies on these loans, up to 60% of the new business loan portfolio As it is known, the Decree of the President of the Republic of Azerbaijan dated June 4, 2020 approved the Procedure for making concessional loans through the funds of the Entrepreneurship Development Fund of the Republic of Azerbaijan and amendments were made to the Charter of the Fund.

According to the new changes, new mechanisms of preferential lending to entrepreneurship start to be applied by the Entrepreneurship Development Fund of the Ministry of Economy. One of these mechanisms is the provision of soft loans for the purchase of equipment in order to create access to soft loans for entrepreneurs without the requirement of real estate collateral. The essence of the mechanism is that the soft loan is used to purchase new equipment, which is also taken as collateral. The interest rate for banks under this mechanism is 7%. The new mechanism will make a significant contribution to further expanding access to finance for businesses, supporting investment activity, economic growth as well as employment.

In addition, in areas requiring long-term investment in agriculture (e.g, tea, horticulture, etc.), the loan term for small-sized loans has now been increased from 3 to 5 years, for medium-sized loans from 5 to 7 years, as well as half of the overall loan period has been defined as a grace period.The main purpose of the mechanism is to reduce credit risks and increase access to soft loans for small and medium entrepreneurs.

Another approved mechanism is the restructuring of credit institutions' debt to the Fund, if necessary, in accordance with the procedure established by the Supervisory Board of the Entrepreneurship Development Fund due to changes in circumstances as a result of force majeure impacts (natural disasters, epidemics, etc.).

The decree made additions and changes to the charter of the Entrepreneurship Development Fund, whereby adding providing state guarantees and subsidies to its activities.

Meanwhile, mechanisms have been launched to provide state guarantees to entrepreneurs for their new loans and subsidize interest on these loans, as well as to finance part of the loan interest of entrepreneurs with existing loans. Thus, in order to increase investment in the non-oil sector and access to financial resources for private sector businesses, as well as to minimize the impact of the coronavirus pandemic on the business environment and economic activity, existing financial mechanisms will be expanded and additional support tools will be introduced.

In accordance with the mechanism of providing state guarantees for business loans as well as interest subsidies on these loans, up to 60% of the new business loan portfolio with the amount of 500 million AZN is guaranteed by the state, and 50% of the annual interest rate on these loans is financed by the government. This mechanism applies to loans with a term of up to 3 years and an annual interest rate of no more than 15%. The grace period determined for these loans is up to 12 months.

In regards with effective application of this mechanism, Online Credit Platform (www.e-edf.gov.az) was developed and firstly launched in the country, in order to facilitate access to financial resources for businesses, reviewing of loan applications in a short period of time, receiving applications, conducting necessary analyzes by credit institutions and the Entrepreneurship Development Fund, as well as issuing decisions to entrepreneurs. All the mentioned processes will be carried out through the Online Credit Platform.

Thus, an entrepreneur wishing to obtain a state-guaranteed loan enters the necessary information into the Electronic Credit Platform (www.e-edf.gov.az), selects an authorized credit organization (e.g banks) and confirms the application by specifying the loan amount in accordance with his/her business plan. The application of an entrepreneur is considered within 7 working days for quick loans (up to 200,000 AZN), and within 10 working days for a traditional loan. If the application of an entrepreneur with pandemic-affected activity is rejected, the entrepreneur has the right to re-apply through this or another authorized bank after eliminating the shortcomings mentioned as reasons.

The issuance of business loans through this electronic system offers a number of advantages for entrepreneurs. Entrepreneurs apply for business loans online, authorized credit organizations and the Ministry of Economy consider their applications simultaneously, and the status of applications is monitored in real time regime. The implementation of the Electronic Credit Platform will also provide flexibility and transparency in obtaining loans, equal conditions for entrepreneurs, create a healthy competitive environment, expand access to loans for entrepreneurs, as well as will cause time and Money saving.

Another new mechanism is the credit-guarantee support program on the existing loan portfolio of entrepreneurs operating in the areas affected by the pandemic. The program encompasses  subsidizing of 10% interest rate point for the first year on existing bank loans in the amount of 1 billion manat without state guarantee (regardless of the term and interest rate of loans). The introduction of this mechanism will play an important role in reducing the financial burden of pandemic-affected entrepreneurs.

In general, the implementation of these programs will restore economic activity, increase access to finance for entrepreneurs, especially small and medium ones, accelerate investment in pandemic-affected areas and maintain employment in these areas, share financial risks, cause the recovery of the financial and banking sector, improve the financial position of affected entrepreneurs, eliminate the liquidity risk and difficulty regarding increase of problem loans in the banking sector.

for AZN is guaranteed by the state, and 50% of the annual interest rate on these loans is financed by the government. This mechanism applies to loans with a term of up to 3 years and an annual interest rate of no more than 15%. The grace period determined for these loans is up to 12 months.

In regards with effective application of this mechanism, Online Credit Platform (www.e-edf.gov.az) was developed and firstly launched in the country, in order to facilitate access to financial resources for businesses, reviewing of loan applications in a short period of time, receiving applications, conducting necessary analyzes by credit institutions and the Entrepreneurship Development Fund, as well as issuing decisions to entrepreneurs. All the mentioned processes will be carried out through the Online Credit Platform.

Thus, an entrepreneur wishing to obtain a state-guaranteed loan enters the necessary information into the Electronic Credit Platform (www.e-edf.gov.az), selects an authorized credit organization (e.g banks) and confirms the application by specifying the loan amount in accordance with his/her business plan. The application of an entrepreneur is considered within 7 working days for quick loans (up to 200,000 AZN), and within 10 working days for a traditional loan. If the application of an entrepreneur with pandemic-affected activity is rejected, the entrepreneur has the right to re-apply through this or another authorized bank after eliminating the shortcomings mentioned as reasons.

The issuance of business loans through this electronic system offers a number of advantages for entrepreneurs. Entrepreneurs apply for business loans online, authorized credit organizations and the Ministry of Economy consider their applications simultaneously, and the status of applications is monitored in real time regime. The implementation of the Electronic Credit Platform will also provide flexibility and transparency in obtaining loans, equal conditions for entrepreneurs, create a healthy competitive environment, expand access to loans for entrepreneurs, as well as will cause time and Money saving.

Another new mechanism is the credit-guarantee support program on the existing loan portfolio of entrepreneurs operating in the areas affected by the pandemic. The program encompasses subsidizing of 10% interest rate point for the first year on existing bank loans for AZN without state guarantee (regardless of the term and interest rate of loans). The introduction of this mechanism will play an important role in reducing the financial burden of pandemic-affected entrepreneurs.

In general, the implementation of these programs will restore economic activity, increase access to finance for entrepreneurs, especially small and medium ones, accelerate investment in pandemic-affected areas and maintain employment in these areas, share financial risks, cause the recovery of the financial and banking sector, improve the financial position of affected entrepreneurs, eliminate the liquidity risk and difficulty regarding increase of problem loans in the banking sector.