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Business Loans

Farm and related businesses operating in the Republic of Armenia, as well as organizations engaged in processing of agricultural products.
Modernization of production, attraction of long-term capital investments and organization of production processes, financing of raw material collection and marketing of products and services, as well as financing of circulating capital.
  • Loan amount and currency:  AMD 100,000– 120,000,000 or  1,000-150,000 USD;
  • Term: 6-84 months
  • Annual interest rate: 13-20% (AMD) or 10-16% (USD)
  • Loan interest is calculated on the outstanding loan balance;
  • Repayment schedule: flexible, with up to 12 months grace period for principal repayment;
  • Interest is paid monthly, potentially with up to 12 months grace period;
  • Loan security: movable and immovable property;
  • Loan is provided non-cash or in bank cheques;
  • Loan is disbursed within at least 20 calendar days after the Organization issues a decision on provision of the loan;
  • Assessment of a customer’s creditability and its credit history serve as basis for issuing of a decision on satisfaction/rejection of loan application.
  • In instances where the borrower fails to repay the loan principle and interest in due time, information about the client will be recorded in the Credit Registry.
  • Where the borrower fails to fulfill its obligations, and if the collateral does not cover the loan obligations, such obligations may be redeemed at the expense of other property and/or funds of the borrower.

Calculation of loan interest rate

Loan interests are calculated on the actual loan balance, considering 365 days in the year. The nominal interest rate of the loan remains unchanged during the entire effective period of the loan.

If the two-fold of the banking rate (settlement banking interest rated established by the CBA) is less than the interest rate defined by the Company, the two-fold banking rate shall be defined as a maximum interest rate.

Example of calculation of loan interest amounts

Simple example of calculation of a loan interest rate: (Loan amount* interest rate)/ number of months (or days)

Thus, when providing a loan of AMD 2,000,000, at 16% annual interest rate and 18 months of repayment period, the average monthly interest due to payment shall be AMD 2,000,000*0.16/18= AMD 17,778.  It should be mentioned that the actual amount of monthly interests would depend on the loan repayment schedule, yet not exceed the average amount specified above.

Other fees

  • Expenses incurred by the borrower in relation with loan provision may include:
  • Notarization, if the collateral is an immoveable property: AMD 3,000 – 15,000
  • State registration of the lien, if the collateral is an immoveable property or a transport vehicle: AMD 25,000 – 35,000
  • State registration of lien of the transport vehicle: AMD 3,000

Penalties

  • In case of delays of loan interests and/or principle payment, a fine is imposed  at the rate of 0.1% on overdue amount  (overdue loan amount and overdue interest amount), for each day of delay
  • At 1% of the amount repaid during no later that six months since the date of signing of the loan agreement.

Objects of collateral may be:   
Any divisible and indivisible property accepted by the Company and in circulation, which may be subject to confiscation in cases permitted by the RA legislation. The following items may serve as collateral:

  • Immovable property (industrial premises, lands, buildings, structures, private houses, apartments and other immovable property)
  • Transport vehicles
  • Mechanisms (machinery) and equipments
  • Various inventory holdings
  • Government securities
  • Other property

The maximum loan/collateral value ratio may not exceed 80%. Appraisal and/or insurance of the object of collateral by a specialized organization are not mandatory.

Attention

In the event of failure to fulfill, or improper fulfillment of, obligations assumed by the borrower, the Company takes relevant measures to confiscate and realize the collateral in the manner stipulated by the RA legislation.

If the amount collected from the realization of the pledged property is insufficient to cover the Company’s claims, the Company shall be entitled to compensation from other property and/or funds of the borrower.

Deadlines for the loan approval and provision

The approval for the loan application, and provision of the relevant information to the applicant as well as the loan provision to the borrower is handled maximum within 20 days.

Documents required for loan provision: 

For legal entities

  • Loan application
  • Decision on appointment of the director (excerpt from, or a copy of, the order): if the director does not act as a party of the transaction, a power of attorney of an authorized person issued by the director or other competent authority
  • A copy of the ID document of the director or the authorized person
  • State registration certificate (copy), with addendum thereof, and the TIN (taxpayer’s identification number) code
  • Charter (Bylaws) and Articles of Incorporation (copy)
  • Financial statements for the last financial year and the last quarter of the current year
  • Statements on debts from tax and social welfare (pension) authorities
  • Decision of the applicant’s competent authority on applying for loan and pledging the applicant’s (or other persons’) property (rights to property) to secure the loan
  • Ownership certificates of pledged property and grounds  for ownership (copy); if the collateral is an equipment(s), its passport; if vehicle, its registration certificate (copy)
  • If necessary, the Company may request additional documents

For physical entities (individuals)

  • Loan application
  • ID document
  • Ownership certificates of pledged property and grounds  for ownership (copy); if the collateral is an equipment(s), its passport; if vehicle, its registration certificate (copy)
  • Information about incomes (salary or other incomes)
  • If necessary, the Company may request additional documents