What does the new business lending program contain? - From low interest rates to their coverage with state guarantees
Despite the fact that agriculture employs about 1/3 of the country's workforce and generates about 20% of national output, businesses in this sector do not have sufficient access to financing. The reasons for limited access to credit are the relatively high cost of bank credit, which is related to the lack of history, collateral and financial expertise of businesses, elements that increase the price of credit.
The new program of the Bank of Albania aims to improve access to credit for small and medium-sized enterprises, by reducing the cost of funds that banks use to lend to them. The program will have a total fund of 25 billion lek. Commercial banks will receive these funds at a low interest rate from the Bank of Albania, which they will then use to provide loans again at a low interest rate to businesses in this sector.
The program is oriented towards supporting investments that include physical assets and technological platforms, which serve to increase the production capacity or operational efficiency of businesses in agriculture, as well as the refinancing of existing loans that serve for investments in physical assets or technological platforms.
A bank can provide a maximum of 25 million lek loans to an agricultural business. The banking sector can provide loans to small and medium-sized enterprises under this program with an annual interest rate not exceeding 3.5% per year, this will be the maximum ceiling for disbursed loans.
In the case of guaranteeing these loans with state guarantees, which cover 15 - 35% of the credit risk, 35 - 55% of the credit risk, and 55 - 75% of the credit risk, the loan price ceilings will go to 3%, 2.5% and 2% respectively for the remainder of the program.
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