Loan Financing for MSME by KFW Bank

1.

Currency

AMD

2.

Eligibility

• RA resident legal entities and sole proprietors qualifying for SME loans.
• The results of analysis of borrower’s financial statements must meet the Bank’s requirements.

3.

Purpose

• For capital investments and other business activities.
• Note: the Program aims to enhance MSME liquidity by facilitating their access to loans in national currency. The program is not aimed at refinancing of loans of a specific sector(s). It will finance current business needs (working capital) in various economy sectors and investments (equipment, machinery, enterprise premises, etc.).

4.

Loan limits

• Loans backed by collateral: AMD 3,000,001 – AMD 160,000,000
• Loans backed by a surety of at least an individual or legal entity: AMD 1,000,000 – AMD 3,000,000

5.

Disbursement method

Non-cash

6.

Loan period

6 - 60 months 

7.

Grace period for loan principal

In some cases, grace period may be up to 3-6 months

8.

Nominal interest rate per annum

• Loans with up to a 36-month repayment period – 11%
• Loans with repayment period from 36  to 60 months – 11.5%
• Based on a decision of the Bank competent body, the loan interest rate under the Program may be set to equal 10% - 11% for diligent borrower-customers (who actively use bank's various services, ensure non-interest  income and bank account cash turnover, who have signed or intend to sign a cooperation agreement with the Bank (POS, V-POS, payroll projects, etc.)).

9.

Collateral

• Real and moveable property,
• Funds in deposit or current accounts,
• Standard gold bars or scrap gold,
• Short-term government bonds or other securities.
• If appropriate and available, current assets and finished goods (with consideration of the liquidity of other types of collateral or loan-to-value ratio, loan period, customer’s credit history, etc.).
• Additional condition: Personal sureties of business founders/beneficiary owners are required, besides, the Bank may also request submission of a surety of an individual and/or legal entity.

10. 

Acceptable Loan-to-Value  ratio

• Real property and other fixed assets – up to 70% of the appraised value.
• Short-term government bonds – up to 95% of nominal value.
• Other securities – up to 70% of appraised value.
• Standard gold bars and scrap precious metals – up to 95% of appraised value.
• Cash (deposit and current accounts) – up to 90%.
• Working capital – up to 50% of the appraised value.

11.

Insurance

If appropriate

12.

Surety requirements

• An RA resident - legal entity, sole proprietor or individual.
• Absence of past due liabilities, also in relation to issued surety bonds).
• Absence of loan classifications during the past 12 months, and total number of days past due should not exceed 30.

13.

Prerequisites for loans secured only by surety bonds

• Absence of loan classifications during the past 12 months, and total number of days past due should not exceed 30.
• The number of the borrower’s unsecured loans (without the expected loan) should not exceed 5 and their cumulative balance should not exceed AMD  5,000,000 and/or foreign currency equivalent.

14.

Fees and charges

• Loan application review – 0
• Loan account service – 0.5% of the loan amount but not less than AMD 20,000 and not more than AMD 100,000.
• If the loan amount is received in cash, the Bank will charge a cash withdrawal fee according to the Bank’s rates and fees.

15.

State duties and other costs

• State duty charged by RA competent bodies for notarization and registration of collateral agreement.
• Appraisal of pledged assets, according to fees and rates by independent appraisal companies cooperating with the Bank.

16.

Additional conditions

• No refinancing of old loans is envisaged under the Program.