Subsidized agricultural loan

• foundation of orchards, construction of greenhouses and barns,
• acquisition of land plots,
• purchase of agricultural machinery,
• purchase of fodder, seeds, fertilizers,
• extension in livestock,
• construction and repair of barns, cooling facilities etc.

∗ Within the framework of the program, microloans are provided to individuals at 0% interest rate, up to 1 million AMD amount, up to 2 years of loan repayment term, and up to 9 months of grace period for loan repayment.

∗∗ According to the RA Government Decree No.175-L of February 11, 2021, the subsidized loans, will be available to beneficiaries until December 31, 2021, at 0% annual interest rate.

∗∗∗ Loans the amount of which do not exceed 2,000,000 AMD can be provided only with a guarantee, specifically:

• in case of 300,000 - 1,000,000 AMD - at least 1 guarantor,
• in case of 1,000,000 - 2,000,000 AMD - at least 2 guarantors.
  

Loans over 2,000,000 AMD are provided exceptionally with a pledge. Moreover, in the case of loans secured by real estate, the ratio of the loan amount to the realizable value of the pledged property should be at least 80%, and 60% in the case of movable property.

According to the appendix to the decree N184-L of Government of the RA dated March 7, 2019 subsidizing the interest rates on loans to the agricultural sector includes the following provisions:

1. The program is implemented in all communities of the Republic of Armenia in order to promote agricultural activities
2. The participants of the program are individuals and organizations carrying out agricultural activities, as well as commercial banks or credit organizations (Financial Institutions), the Ministry of Economy of the Republic of Armenia (the Ministry), the Rural Finance Facility (RFF) of the “Rural Areas Economic Development Programs Implementation Unit”
3. Loans are provided in AMD.
   • with a maximum nominal interest rate of 14%, moreover, no other fees are charged for the services of financial institutions related to the loan (encashment, service fee, commissions, etc.)
   • Within the amount of AMD 3-15 million (and microloans up to AMD 1 million)
   • Loans can be provided in separate portions,
   • The term of the loan is up to 5 years, depending on the focus of investments; if the proportion of the share of working capital exceeds 30% the loan will be provided for up to 2 years, and in case of more than 70% of fixed assets, the loan will be provided for up to 5 years.
4. According to the decree N 175-L of February 2, 2021 of the Government of RA subsidizing the interest rate of loans provided till December 31, 2021 inclusive will be carried out in such a way that the loans will be provided to businesses at 0% interest rate
5. A grace period of maximum 12 months may be set by the financial institution for both the interest rate and the principal amount.
6. IN CASE OF EARLY LOAN REPAYMENT, NO PENALTIES OR FEES SHALL BE APPLIED.

Loan interest rate subsidy is terminated in the following cases:

1. Misuse of the loan by the borrower, in areas not included in the agricultural-food sector.
2. In case of lender’s total of 60 days overdue obligations towards the current loan for a period of one year (during the previous 12 months) or as a result of overdue obligations towards a financial institution, if it is not classified under the decree N63 of the Council of Central Bank of the Republic of Armenia dated April 23, 1999, which approved "Classification of bank loans operating in the territory of the Republic of Armenia and classification of receivables and order of accumulation of possible loss reserves".
3. In case of early termination of the agreement between the borrower and the financial organization.
4. Detection of falsifications in the information provided by the economic entity.
5. In other cases, stipulated by the contract concluded between the borrower and the financial organization.
6. In case of misuse of the loan and providing false information by the borrower, the subsidized amount provided up to that moment should be refunded and the subsidized amount returned to the RFF by the Financial Organization within three months. The financial organization has the right to demand refund of the subsidy amount from the borrower. In the other cases mentioned above, the loan subsidy is terminated according to the repayment schedule defined for the previous repayment of the current loan.

• Individuals, farms and legal entities engaged in agricultural activities in the territory of the Republic of Armenia
• The age range for individuals is defined 20-65
• The borrower must act on their behalf and for their interest. No loans will be granted in favor of a third party
• The borrower must have no overdue liabilities at the time of application

Borrower, individual

1. Applicant's identity documents (RA passport / ID card)
2. Social Security Number or a reference about its absence
3. Ownership certificate of pledge offered by the client as a loan security
4. Copies of passports of guarantors and/or pledgers
5. Other documents may be required if necessary

Borrower, legal entity

1. Copy of the certificate of the State Register of Legal Entities (with inserts) and Tax Payer’s number copy
2. Identity document of the founders, director and chief accountant
3. A copy of the charter of a legal entity
4. Reference from the State Register of Legal Entities
5. In case of activity subject to licensing - activity license
6. The decision of the competent body (general meeting) on taking a loan
7. Reference from the Tax Inspectorate on liabilities
8. Electronic reports submitted to the Tax Inspectorate for the past year and Notification on the acceptance of the reports
9. Certificate of ownership of the business area(s) of activity or rent agreements
10. Copy of passport (s) of guarantor (s)
11. The Company may request additional documents or other information on the basis of the "Know your customer" principle for the purpose of proper examination of the customer defined by the RA Law on "Combating Money Laundering and Terrorism Financing", as well as may ask other questions during oral communication
12. Other documents may be required if necessary

Guarantor

1. Applicant's identity documents (RA passport / ID card)
2. Social Security Number or a reference about its absence
3. Documents proving the incomes of the guarantor, if necessary
4. In case of a legal entity – charter, state registry number, director's passport and SSN.

Necessary documents in case of pledge

1. Certificate of ownership of the pledged property
2. Grounds for registration of property ownership (contract of sale or donation, decision of the community head or other competent body), if required
3. Certificate on existing property restrictions – not being on pledge or under arrest
4. Owners' identity documents (RA Passport / ID Card) and Social Security Number or a reference about not having it
5. If the pledger is married, marriage certificate and identity card of the pledger’s spouse and social security number

• Loans are processed at the Company's office at 16/7 Arzumanyan Street, Yerevan
• The decision on the loan application is made and communicated to the customer within 3 working day after submitting the necessary documents
• In case of a positive loan decision, the loan is provided to the customer within a maximum 3 working days (unless the borrower nominates another day, or if the transactions related to concluding a pledge agreement and registering the right of pledge take longer)
• The loan amount is provided to the customer in a non-cash way
• Loans are provided to residents possessing stainable income (documented and/or proved by the analysis) for the use of agricultural purposes.
• Criteria for a positive loan decision are:
  • customer creditability assessment,
  • existence of stable income of the borrower,
  • adequate loan security,
  • positive credit history of the borrower,
  • borrower's long-term work experience.
• Credit rejection factors are:
  • insufficient financial indicators obtained as a result of the analysis,
  • insufficient income to repay the loan (when the source of income cannot be
  • identified or the presented income is not found),
  • periodic delays, classifications in the customer's credit history,
  • customer's over-indebtedness,
  • professional opinion of the Company's lending officer,
  • expert opinion of the Company's Credit committee
• The credit history represents the credit behavior of the given person in terms of existing and repaid loans, guarantees given by him. Having a positive credit history plays an important role in making a loan decision. The latter is possible to form loans without paying off delays, if they are used purposefully. You can learn more about credit history from the respective pages of www.abcfinance.am and www.acra.am websites.
• A credit history inquiry is a mandatory condition for obtaining a credit/leasing (loan), any inquiry with the sub-goal of a new loan application may have a negative impact on the CREDIT SCORE estimate, while the Monitoring and Fico Score range inquiries have no or low impact on the CREDIT SCORE. CREDIT SCORE is an index based on your credit history that is used for certain types of crediting. We would like to inform you that a credit history inquiry regarding you can be carried out during the entire period of validity of the credit/guarantee agreement signed with you.
• The credit statement and a copy of it are provided to the borrower free of charge during the whole period of the credit contract.
• NO PENALTIES ARE CHARGED IN CASE OF EARLY LOAN REPAYMENT.

Attention! IN CASE OF LOANS UP TO 5 MILLION AMD, THE LENDER SHALL PROVIDE YOU WITH AN CUSTOMER CREDIT INDIVIDUAL KEY FACT STATEMENT, WHICH WILL INCLUDE THE INDIVIDUAL CONDITIONS OF YOUR UPCOMING LOAN.

Attention! YOU HAVE THE RIGHT TO COMMUNICATE WITH THE FINANCIAL ORGANIZATION IN YOUR PREFFERRED WAY: BY MAIL OR BY E-MAIL. THE INFORMATION EXCHANGE THROUGH THE ELECTRONIC MEANS OF COMMUNICATION IS THE MOST CONVENIENT WAY. IT IS AVAILABLE 24/7, IT IS FREE OF PAPER INFORMATION LOSS RISK AND IT PROVIDES CONFIDENTIALITY.

Attention! THE PLEDGED PROPERTY MAY BE SEIZURED AS STIPULATED BY LAW, IF THE BORROWER DOES NOT MAKE REPATMENTS OF INTERESTS AND PRINCIPAL AMOUNT ON TIME. IN CASE OF INSUFFICIENT PLEDGE VALUE, THE BORROWER'S OBLIGATIONS SHALL BE REPAID AT THE EXPENSE OF THE BORROWER'S OTHER PROPERTY.

Attention! IN CASE OF NON-FULFILLMENT OR INCOMPLETE FULFILLMENT OF THE OBLIGATION BY YOU, THE CREDITOR SENDS THIS INFORMATION TO THE CREDIT BUREAU AFTER 3 WORKING DAYS, WHERE YOUR CREDIT HISTORY IS RECORDED. YOU HAVE THE RIGHT TO OBTAIN YOUR CREDIT HISTORY FROM THE CREDIT BUREAU ONCE EVERY YEAR FREE OF CHARGE.

Attention! “BAD” CREDIT HISTORY MAY IMPAIR YOUR ABILITY TO OBTAIN LOANS/CREDITS IN THE FUTURE.

Attention! HOW TO IMPROVE BAD CREDIT HISTORY. IF YOU ALREADY HAVE "BAD" CREDIT HISTORY, THEN "SITTING AND WAITING" FOR 5 YEARS TO PASS AND YOUR CREDIT HISTORY TO "CLEAR" IS NOT THE BEST SOLUTION. IT IS NECESSARY DURING THIS ENTIRE PROCESS. EXCLUDE DELAYS ON THE CURRENT COMMITMENT LINE, EVEN ONE DAY'S DELAY CAN BE CONSIDERED A PROBLEM. PAY OFF PAST LOAN PAYMENTS IN FULL. AVOID BECOMING A GUARANTOR FOR UNTRUSTABLE PERSONS IN THE FUTURE.

Attention! CREDIT INTERESTS ARE CALCULATED BASED ON NOMINAL INTEREST RATES. THE NOMINAL INTEREST RATE OF THE LOAN SHOWS HOW MUCH IS THE ANNUAL INTEREST OF THE LOAN, WHICH IS CALCULATED ON THE LOAN BALANCE. THE LOAN INTEREST IS CALCULATED ON A DAILY BASIS, BASED ON THE BALANCE OF THE LOAN PRINCIPAL AMOUNT AND IN THE LOAN CURRENCY. THE BASIS FOR CALCULATING THE INTEREST IS THE CALENDAR YEAR.

Attention! THE LOAN INTEREST RATE CANNOT EXCEED THE DOUBLE PERCENTAGE RATE DEFINED BY THE CENTRAL BANK OF ARMENIA.

FOR GUARANTORS

• If the borrower does not fulfill his/her obligations, you will pay on his/her behalf, your credit history will deteriorate and you may lose your property.
• You will be provided with a copy of a loan, guarantee agreements and loan repayment schedule.
• Communication will be conducted in the way you prefer.
• You will be notified about the change in the terms of the contract 7 days in advance.
• The company will send you an SMS reminder about the existing obligation, and in case of loan repayment delay, you will get informed about it at least one day later.
• You have the right to request information from the lender at any time regarding the loan balance, as well as to get from the borrower the money paid by yourself for repayment of the loan and other losses incurred on behalf of the borrower.

Dear customer, the annual nominal interest rate is the interest rate that is announced by the financial organization and based on which the amount to be paid by the borrower is calculated.

Annual percentage rate shows what the annual nominal interest rate will be if the latter includes all the mandatory loan service and payment fees.

The annual percentage rate is calculated based on the following formula:

where
i - Annual Percentage Rate (APR). This is the total cost of the loan/credit made by the customer (borrower) expressed as the annual interest rate of the loan, which includes all interest and other payments that the consumer is obliged to pay upon receipt of the loan, as well as throughout its operation,
A - Credit sum (initial size of credit provided to consumer by creditor),
n - number of the repayment directed to credit coverage,
N - number of the last repayment directed to credit coverage,
Kn- number of the last repayment directed to credit coverage,
Dn- time span between the day or credit extension and the day of making the n-th repayment directed to credit coverage, expressed by number of days.

Example of loan interest calculation

• Loan Amount – 5,000,000 AMD
• Annual nominal interest rate - 12.00% (which is subsidized by the RA Government)
• Loan term - 36 months
• Commission fee - n/a
• In this example
  • the monthly payment will be 138,889 AMD (repayment amount may vary depend on the days of the month)
  • daily interest rate will be - Loan amount (balance) × Loan interest rate ÷ 365 = (5,000,000×12.00%÷365) = 1,644 AMD
• Annual Percentage Rate (APR) will be 12.00%