Cheap Loans for Tech Firms to Cushion COVID-19 Consequences

The outbreak of the novel coronavirus in Iran since mid-February has hampered the activities of a large number of tech firms and startups and darkened their ecosystem’s prospects, as they struggle to survive in the sluggish market.
In an effort to revitalize the tech teams, which are hoped to oil the wheels of the domestic economy with their smart solutions and innovation, tech authorities have started providing them with financial aid in the form of cheap loans and grants, Mehr News Agency reported.
With the growing number of people infected by COVID-19, people are advised to stay at home and maintain social distancing to help cut the transmission chain of the virus. As a result, online food delivery orders, hotel and tourism bookings are facing difficult times.
According to the local media, Snapp Trip, a subsidiary of the Snapp ride-hailing company that offers online travel booking services, Chilivery, an online food delivery startup, the travel service provider Alibaba Group in Iran and numerous small businesses have been severely affected by the current stagnation in the market.
Most recently, the Ministry of Information and Communication Technologies announced that tech firms and startups have been forced to downsize their teams and are on the verge of bankruptcy. These companies can get low-interest loans from the ministry to restore their business.
On Monday, ICT Minister Mohammad Javad Azari-Jahromi said in a tweet, "COVID-19 is killing jobs in Iran’s startup ecosystem. This should stop. We will offer these companies cheap loans and aid packages. The firms can get tax holidays as well.”
The amount and conditions of the lending and other measures are yet to be announced by the ministry.
According to the Health Ministry, as of Monday, 853 have died of the acute respiratory disease from the total of 14,991 infected. Reportedly, 4,996 patients have recovered.

More Support

Besides the ICT Ministry's measures, the government-based Iran National Innovation Fund is planning to pay 50 trillion rials ($322.5 million) in loans to knowledge-based companies and tech firms to help boost their operations.
According to INIF chief Ali Vahdat, some 200 firms expressed interest in receiving the fund, although the most eligible will be vetted before selection, the institution’s website Inif.ir reported.
“The move is aimed at increasing the production of health-protective items used during the pandemic, including N95 respirator and surgical masks, hand sanitizers, alcohol-based disinfectants, medical air disinfectant machines, antibacterial fabrics and covers for hospital use, as well as test kits and simulators,” he said.
Dozens of Iranian startups and knowledge-based companies are active in the production of health care products and medical supplies.
To receive the loan and start production, the applicant knowledge-based company should be certified by all the institutions involved, including Iran’s Food and Drug Administration and Health Ministry.
Referring to the spread of novel coronavirus in the country, Vahdat said the pandemic cannot be controlled without utilizing the potentials of tech ecosystem.
“The country’s knowledge-based economy, which has currently grown significantly, is being helped by young entrepreneurs and tech teams to withstand the negative effects of the disease,” he added.

CBI Backing Tech Firms

The Central Bank of Iran has also recently announced its full support for tech firms, which could help them pass through tough times.
During a meeting with senior INIF officials last week, CBI Governor Abdolnasser Hemmati said the bank is willing to allocate financial support to help the tech ecosystem flourish.
Pointing to INIF’s endeavors in the past several years, Hemmati said that in order to strengthen startups and knowledge-based companies, support centers will be established in all provinces, which will ease startups’ access to legal and financial support.
Besides the provincial funding centers, plans are under consideration to set up offices that would offer specialized services to firms active in fields like nanotechnology, social innovative services and the internet of things, he added.
According to INIF, 4,800 knowledge-based companies are currently active nationwide and employ over 300,000 people.
 

Full Support

Notwithstanding the critical condition caused by the COVID-19 disease, the government is optimistic that giving financial, technical and spiritual support to firms can help them expand their businesses and consequently help the country materialize a digital economy.
INIF, affiliated to the Vice Presidential Office for Science and Technology, and other tech authorities have played a major role in extending vital resources.
The administration of President Hassan Rouhani established the fund with an initial investment of 30 trillion rials ($193 million). As per the law, the government is required to allocate 0.5% of its annual budget to INIF.
The fund’s officials say INIF will continue to give financial support to fledgling tech firms.