An estimated 1,206 small and medium-sized companies took loans in the first five months of the current fiscal year that started in March.
According to the Ministry of Industry, Mining and Trade, which is in charge of introducing the SMEs to banks, the total loans reached 73 trillion rials ($230.3 million), newswires said.
Loans were also given to ‘unestablished business projects’ that reported 60% physical progress. As per the ministry data, more than 5,840 SMEs had applied but 1,970 firms were introduced to the lenders.
Companies with 50 workers or less, and 100 workers or less are considered SMEs. According to the Iran Small Industries and Industrial Parks Organization, Iran is home to 80,000 registered SMEs.
In April, the Central Bank of Iran sent a note to lenders updating support policies for supporting for SMEs. Lending priority must be given to firms introduced by the special provincial task forces provided that they are financially and technically viable and ensure sustainable employment.
Next on the priority list are SMEs whose goods are in demand in the domestic market and less likely to get stuck in warehouses.
Firms with downed shutters or operating at half capacity are third on the list and banks must first determine that their poor condition is due to lack of funds.
Banks can also lend to businesses that have remained dormant for long and can be revived with financial backing. Money can be lent to enterprises that are creditors of state and executive organizations and companies.
More than 5,140 SMEs borrowed 240.3 trillion rials ($849 million) last year.
SMEs play an important role in the Iranian economy. They outnumber large firms, employ more people and are generally entrepreneurial and innovative. Reports say SMEs constitute 92% of the 85,000 manufacturing enterprises.
Policymakers see SMEs as crucial through which knowledge-based sustainable development can be achieved gradually and hope that the financial support given them will augment their role in the production cycle and help create jobs.
In emerging economies people generally look for work in small- and medium-sized enterprises. SMEs contribute roughly 45% of total employment and 33% of GDP in these countries, according to the Organization for Economic Cooperation and Development.
The Industries Ministry also published data on lending to manufactures under another government scheme to boost employment and production.
It said 68 trillion rials ($214.5 million) was paid to 755 production units since November, to help them meet working capital needs and buy machinery. The loans were given by the National Development Fund of Iran, the sovereign fund, at 14%.
