A total of 40 trillion rials ($200 million) in cheap loans have been granted to businesses impacted by the coronavirus pandemic so far, says Deputy Minister of Cooperatives, Labor and Social Welfare Isa Mansouri.
“Nearly 900,000 people have registered at Kara.mcls.gov.ir for loans; banks are currently working on about 76,000 files submitted by applicants. Each of these files includes several numbers of jobs; loans to 380,000 files covering about one million jobs will be paid in the near future,” he was quoted as saying by IRNA.
The government approved a 490-trillion-rial bailout ($2.43 billion)—out of a package worth 750 trillion rials ($3.73 billion) for low-income households and struggling businesses—to help small- and medium-sized economic enterprises in the wake of coronavirus.
The Central Bank of Iran has identified 14 groups of businesses, including 55 subgroups and 1.2 million enterprises, eligible to receive government-backed loans.
“For each employee, banks grant 120 million rials [$597] to employers, provided they retain at least one worker on their payroll. Businesses, which were forced to shut down, will receive 160 million rials [$796] for each employee. The 24-month repayment period will start as of October,” Mansouri said.
The lending rate will be 12% to be repaid within two years, Abdolnasser Hemmati, the governor of the Central Bank of Iran, has said.
Commenting on the interest rate, Hemmati said it is reasonable, given the high inflation rate in the country.
“Even if banks set an 18% interest on loans, the real interest rate would still be negative when compared to annual inflation. Any rate below 12% would apparently impose further financial strain on banks,” he addeed.
Hemmati said only businesses that did not lay off workers during the corona crisis would be eligible for the loans. He instructed banks to process the loans soon and cut red tape.
Guilds Suffer $1.3b in Losses per Month
Early June, Hoshyar Faqihi, an official with Iran Chamber of Guilds, said coronavirus lockdowns inflicted monthly losses worth 260,000 billion rials ($1.3 billion) on local businesses under the supervision of ICG. “The chamber has identified and introduced 57 groups of businesses to the government to receive coronavirus bailout, of which 25, including coffee shops, reception halls, beauty salons, clothing units and bag and shoe shops, have been found eligible to receive loans at the interest rate of 12%,” he said.
The monthly losses incurred by these 25 groups are estimated to stand at 143,000 billion rials ($715 million) and those of the remaining 32 groups were put at 122,000 billion rials ($610 million). The latter did not qualify for government loans.
Faqihi said about 2.3 million people are working in sectors that were not found eligible for the bailout and 2.8 million people are working in guilds that will receive government aid.
SCI Surveys Coronavirus Impact on Businesses
Thirty-eight percent of businesses came to a complete standstill due to the outbreak of the new coronavirus in the two months leading to April 19; the percentage declined to 21% in the month ending May 20.
Based on a nationwide survey conducted by the Statistical Research and Training Center affiliated with the Statistical Center of Iran on nearly 4,000 respondents, a total of 22% of Iran's businesses continued their full operations seamlessly during the first two months of the pandemic; the figure improved by 12% to reach 34% in the month ending May 20.
About 40% of businesses operated at a fraction of their capacity in the two month ending April 19; the percentage increased to 45% in the month ending May 20.
When considering different aspects of economic activities of businesses, the coronavirus mostly hit their sales level. Cash flow, labor force, production and saving level were other aspects of economic activities impacted by the spread of coronavirus in the descending order. The ranking was the same in both periods under review.
Thirty percent of all businesses made at least one employee redundant during the two months ending April 19; the percentage reduced to 7% in the month to May 20.
At least one employee worked remotely in 25% of all businesses over two months to April 19 compared with 20% in the month ending May 20.
Of all businesses, 24.5% reported price increase [in their goods or services], 22% price decrease and 53.5% reported no change during the two months to April 19. The percentages stood at 28% (price increase), 20.2% (price decrease) and 51.9% (no change) in the month ending May 20.
Over two months to April 19, 70% of all businesses reported a decline in sales, a 16.1% rise in sales and 13.1% reported no change. These percentages stood, respectively, at 66.8%, 16.7% and 16.6% in the month ending May 20.
Sixty-three percent of businesses reported a decrease in production, 15.38% increase and 21.2% reported no change in the level of production during two months to April 19. These percentages stood, respectively, at 57.2%, 16.5% and 26.3% in the month ending May 20.
The most-cited challenges for businesses during the two months were wage payment (25%), repayment of loans (21%) and payment of rents (21%). Over the month to May 20, wage payment with 29%, repayment of loans with 21% and payment of rents with 14% were the main problems facing businesses.
According to the survey’s respondents, the main solution to the economic crisis created by the coronavirus is getting credit from banks (44%), taking out loans from micro financial institutions or real entities (20%) and reducing operational expenses (13%).
Of all respondents, 65.5% didn’t feel optimistic about their business prospects, 16.3% believed things would change for a better and 18.2% said the situation would remain unchanged.
If the current situation persists, 62.8% of respondents said production would decrease, 23.7% said it would increase and 13.5% said it would remain unchanged in the next three months.
