Could you briefly introduce the Entrepreneurship Development Fund?
Vusal Novruzov:
The Entrepreneurship Development Fund is a state institution operating under the Ministry of Economy of the Nakhchivan Autonomous Republic. It was established to support entrepreneurship and promote the development of the real sector in the autonomous republic. Its mission is to stimulate the development of the regional economy and small and medium-sized enterprises. The main function of the Fund is to provide concessional financing for entrepreneurs’ projects in priority sectors.
What are the main differences between concessional loans and ordinary bank loans?
Vusal Novruzov:
The main differences between concessional loans and commercial loans are reflected in three key aspects.
First, the interest rate is lower. Since concessional loans are provided with state support, their annual interest rates are significantly lower compared to ordinary commercial loans. The annual interest rate on concessional loans is 5%. This reduces the financial burden on the entrepreneur and allows the project to be implemented more easily.
Second, the loans are provided for a longer term. As the Fund’s concessional loans are intended to support long-term development projects, the loan terms are longer compared to ordinary bank loans. It should be noted that, depending on the nature and direction of the project, the maximum loan term is 10 years.
Third, a grace (interest-only) period is provided. To explain this, one of the important advantages of concessional loans is the availability of a grace period. In order to ease the financial burden on the entrepreneur in the initial stage of project implementation, a grace period is set for the repayment of the principal amount of the loan. This period may be up to half of the total loan term.
You mentioned that the interest rate is 5%. How does this change depending on the loan term?
Vusal Novruzov:
The annual interest rate on the Fund’s concessional loans is set at up to 5%, regardless of the amount or term of the loan. In other words, under no circumstances can concessional loans provided from the resources of the Entrepreneurship Development Fund exceed 5%.
What are the priority areas for the EDF in terms of financing?
Vusal Novruzov:
The Fund’s priority directions are mainly activities in the industrial, agricultural, and services sectors, especially those focused on production and processing. In addition, projects that support the development of the regional economy are also considered a priority. Projects to be implemented within the Sharur Industrial District and the Nakhchivan Industrial Park will also be among those given preference by the Fund. I should note that these priority areas are updated every year, taking into account the economic priorities and regional factors.
In which cases are loan applications rejected?
Vusal Novruzov:
Applications may be rejected if the project does not comply with the identified priority directions, or if, during the analysis, the economic efficiency of the project is assessed as unsatisfactory.
Rejection may also occur in cases where misuse of the loan funds is detected.
