Loans to Create Small-Scale Rural Production Units

Loans to Create Small-Scale Rural Production UnitsLoans to Create Small-Scale Rural Production Units

L oans will be granted to applicants to establish production units in villages and border areas of the country, deputy first vice-president for rural and deprived areas development Seyed Abolfazl Razavi announced recently.

 The plan aims to help improve living conditions in targeted communities to prevent them from migrating to metropolises, he said, adding that “nearly 33,000 villages are deserted today and this has caused 10 million hectares of agricultural lands to be left fallow.” Also in border areas poverty, deprivation and unemployment have a direct negative impact on local security.

Providing local communities with financial assistance to set up small-scale production units can help address the problems.

He said under the new plan, “200 households should form a cooperative to be eligible for the loan to launch a production unit.  The loans will be provided at 3% and 0% interest in villages and border areas respectively,” ISNA quoted him as saying.

The interest rates would be 10% in villages and 7% in border areas, if a cooperative group comprises less than 200 households.

On the loan amount he said “it will be four times the deposit by a cooperative. For example, if 20 households have $150,000 to start their business venture, a loan of $600,000 would be granted to them.”

For border areas the loan will be nine times higher, since border areas are at a greater risk of unemployment and migration, and need of more support.

The applicants can be villagers or urban residents who want to establish business units in villages or border areas. They will also be able to use land owned by the government to establish the production unit without having to buy the land or paying rent on it, Razavi said.


Since many villagers don’t own property title deeds, their subsidy cards will be considered as collateral. But if the cooperative is less than 200 households, title deeds would be necessary.

The repayment in installments begins three years after the loan is sanctioned and should be paid over a five-year period.

Applicants may refer to the governor’s office to receive the loans.

Due to remoteness from the capital, the unemployment in border areas is higher than in other parts. The best border guards are local residents; therefore, creating opportunities to prevent them from migrating to the metropolises is necessary.

Migration is a phenomenon that has increased rapidly over the past two decades and the government has taken several measures to check the trend.