Economy, Domestic Economy

Small Enterprises Operating Below Capacity

Small Enterprises Operating Below CapacitySmall Enterprises Operating Below Capacity

Although small enterprises account for 92% of Iran’s industrial production units and constitute 45% of industries’ employment, these businesses have not been faring well lately.

According to Eghtesad News, about 6,000 industrial production units are facing bankruptcy and more than 20,000 small enterprises are operating at less than 70% of their capacity.

“Surveys indicate that about 70% of non-operational production units have cited liquidity shortages as the main cause of bankruptcy,” said deputy director for economic affairs and planning at Small Industries and Industrial Parks Organization, Farshad Moqimi.

The shortage of liquidity, according to the official, comes as banks “simply do not trust small enterprises” to provide them with much-needed loans.

“Small enterprises mostly put forward elaborate and innovative projects. However, banks happen to have difficulty evaluating these projects properly, which leads them to assess risks way higher than they actually are,” he said.

The official noted that even if small startups manage to beat the odds and succeed in getting the loan, most of them are unable to cope with high interest rates.

To address these woes, the Bank of Industry and Mine is going to allocate $5.8 billion in loans to small enterprises to revitalize production and get them back on their feet.

Moqimi added that the Small Industries and Industrial Parks Organization has reactivated 340 small production units during the first half of the current Iranian year (started March 21) and is planning to increase this figure to 1,000 by the yearend.