Less than 500 small and medium-sized businesses have qualified so far for low-interest loans which the Armenian government hopes will help them remain afloat during a recession caused by the coronavirus pandemic.
The commercial bank loans subsidized by the government are repayable in three years, with a grace period set for the first two years. They are meant for those Armenian firms whose annual revenues ranged from 24 million drams to 500 million drams ($50,000-$1 million) last year. The scheme is part of a broader coronavirus-related stimulus package approved by Prime Minister Nikol Pashinian’s cabinet late last month.
Government officials said on Monday that only 1,200 of some 70,000 small and medium-sized enterprises (SMEs) registered in Armenia have applied for such cheap credit. They said the government has approved only 461 of those loans applications worth a combined 5.2 billion drams ($10.8 million).
Ruben Osipian, the head of a small business association, estimated that the real number of SMEs active in the country stands at around 5,000. Many of them register their workers as individual entrepreneurs to pay fewer taxes, he said, adding that this explains why the number of registered firms is much higher.
Osipian said that the number of loan applicants is very low even considering the actual number of SMEs. He claimed that many of them are unable to meet the lending criteria set by the government.
The requirements include only include not only the minimum annual turnover of 24 million drams but also the absence of any delays in payment of taxes or loan repayments carried out last year.
Osipian complained that his own firm both had a smaller turnover and was fined by tax authorities for not submitting a financial report on time. For the same reason, he said, it is also not eligible for government grants to be provided to those small businesses that have not laid off any workers in recent weeks.
Pashinian announced on Friday that almost 11,300 entities have already received such grants totaling 1.8 billion drams. He said that the government has also approved 6 billion drams in cash payments to more than 86,500 employees of various private firms forced to halt their operations since March 13.
Pashinian put the amount of overall coronavirus relief allocated by the government to date at 43.4 billion drams ($90 million).