The Central Bank of Iran has called on banks and credit institutions to prioritize lending to small and medium-sized enterprises.
Top priority should be given to SMEs introduced by special provincial task forces on the condition that the companies are financially and technically viable and committed to sustainable employment.
The next priority is for SMEs producing marketable goods and not wanting to expand their inventories.
Enterprises that have downed their shutters or operate below capacity would be next on the loan eligibility list. Banks will be obliged to decide whether lack of credit undermined a company’s production and productivity.
Banks can give loans to businesses that are inactive and injecting liquidity would revive and restore such companies.
Loans would also be given to SMEs to which executive bodies and state companies owe money and have not been reimbursed over the years.
SMEs requesting loans would be exempt from restrictions that prohibit companies in arrears to banks and whose checks have been invalid. However, the amount of loan should not exceed their non-performing loans.
The lender cannot expropriate the loan in settlement of the SME’s unpaid debt NPL or use it for the defaulting company to clear it’s bad checks.
It has been reported that banks plan to give 1,000 trillion rials ($4.3 billion) in working capital loans before the fiscal year ends next March.
The CBI has said 27,000 plus SMEs took loans worth 856 trillion rials ($3.7b) last year, 57% over the amount a year before.
By definition, enterprises run by 50 workers or less, and 100 workers or less are considered small- and medium-sized enterprises respectively, according to the Iran Small Industries and Industrial Parks Organization. Iran is home to 80,000 registered SMEs.
Though small in size, SMEs play an important role in the economy. They outnumber large firms, employ more people and are generally entrepreneurial helping shape innovation. Small-and medium-sized enterprises constitute 92% of Iran’s 85,000 manufacturing enterprises.
SMEs affiliated to the ISIPO exported $1.74 billion worth of goods in the first half of the last fiscal year (March 20-Sept. 21, 2020) up 16.7% compared to the year earlier.
The main exports were food, steel containers, plastic products and chemicals that prevent gas hydrate formation.
According to IRNA, the main export destinations were Pakistan with $1 billion, followed by Iraq $364 million, Afghanistan $83 million, the UAE $50 million, Turkey $36 million, the
Republic of Azerbaijan $26 million, Armenia $25 million and India $20 million.
