FARM CREDIT ARMENIA
UNIVERSAL CREDIT ORGANIZATIONCommercial Cooperative
Under the Agricultural Equipment Leasing Subsidy Program, leasing is provided at a maximum annual interest rate of 14%, and the interest is subsidized by the state (partially or fully), resulting in the lessee paying 2% per annum, and economic assistance for businessmen operating in the areas of border settlements and military service duties. Leasing interest is fully subsidized for citizens disabled as a result of combat duty or operations during execution.
Within the framework of the state program to support the leasing of agricultural equipment, leasing is provided for a period of 3-60 months, and the interest is subsidized by the state (partially or fully) in the amount of up to 10 percentage points per year in the case of AMD and up to 6 percentage points in the case of US dollars, and Leasing interest is fully subsidized for entrepreneurs operating in the areas of border settlements receiving social support.
The interest rate for leasing devices, equipment, and components provided within the framework of the "Modernized Economy Measure" program is subsidized at the rate of 10 percentage points per year for 42 months.
Target group – In order to conclude a leasing transaction within the framework of the leasing subsidy programs, "Farm Credit Armenia" UCO CC can apply in the territory of Armenia with agriculture, village. "Farm Credit Armenia" UCO CC member-shareholder legal entities and natural persons up to 70 years of age engaged in food processing and sale, as well as entrepreneurial activity.
The following main assets sold in the primary market can be the subject of leasing:
- Tractors, agricultural machinery, equipment
- Production lines and equipment
- Construction equipment
- Motor transport
- Other fixed assets
Equipment used in the following areas can be the subject of leasing:
- animal husbandry, including cattle breeding, sheep breeding, pig breeding, poultry breeding, beekeeping, fish breeding, productive animal breeding, snail breeding,
- horticulture, including greenhouse farming,
- cold storage, including milk procurement stations and isothermal tanks transporting milk,
- activities of sorting, packaging and filtering of fresh fruits and vegetables and legumes,
- slaughterhouse farm, mobile and mobile modular slaughterhouses, as well as means of transportation of the slaughterhouse purchased by the slaughterhouse service provider,
- agro-processing industry,
- other areas of agro-food activity
The subject of leasing can also be truck cranes and metal containers for storing raw materials and products and oak containers used in winemaking.
The minimum advance payment required for leasing is defined as 20% of the value of the leasing object. Pledge and/or guarantee may be required at the discretion of the Credit Committee.
The subject of the lease is subject to insurance with a custodial company acceptable to the UCO. Insurance must be carried out throughout the duration of the leasing contract, at minimum intervals of one year.
After the end of the leasing contract, the lessee can acquire ownership of the leased fixed asset. Leasing interest is calculated on the actual balance of the principal amount, assuming a year of 365 days with a nominal interest rate.
Leasing transactions with the funds of MCA-Armenia Fund are concluded in the presence of a positive conclusion from the fund.
The interest accrued to the loans is calculated towards the actual balance of the loan, at nominal interest rate, assuming that a year consists of 365 days.
Example of loan interest calculation
Annual interest amount = balance of the loan amount x annual interest rate /365
Example:
Balance of the loan amount – AMD 2,000,000
Annual interest rate of the loan - 14%
Daily interest amount = 2,000,000 x 14 %/365 = 767.12
The annual actual interest rate shows the cost of the loan for you in case if you pay the interest amount and make other payments according to the specified schedule and sizes.
Size of penalties - In case of delays in repayment of the loan interest or principal amount, the client pays penalty of 0.13% of the overdue amount (overdue principal amount and overdue interest amount of the loan) for each day of delay, until the 270th successive day of being overdue. Starting from the 271st successive day of being overdue, calculation of penalties ceases.
Possibility of early repayment – The client may repay the loan before the deadline specified in the agreement. Except if the loan is disbursed with the funds provided by the MCA Armenia Foundation, as well as, irrespective of the fund, except for agricultural loans with an amount up to AMD 2 million and its equivalent in foreign currency, when repaying the loan in full, the borrower pays penalty for early payment, in the size specified by the tariffs.
In case of leasing provided by MCA Armenia Fund, regardless of the amount, no early repayment penalty is charged.
According to the relevant decision of the Government of RA and the conditions of the leasing agreement of the VC interest rate subsidy program, in case of detecting falsity in the information provided by the lessee, using the leasing for non-purposeful use, as well as having an overdue obligation for the given loan for more than 90 days in the previous 12 months, or in case the leasing is classified in a class other than the standard class. the interest subsidy will cease, leading to an increase in the interest actually paid by the lessee.
Monthly, quarterly, semi-annually depending on the client's cash flow.
Security - Collateral, guarantee.
The following can be accepted as collateral items:
- real estate (production areas, buildings, houses, apartments, land plots, fish ponds, gardens, and other real estate);
- vehicles – passenger cars and trucks;
- agricultural machinery;
- construction machinery;
- production lines, equipment;
- large and small cattle, sows.
The agreement for pledge of real estate is subject to notarial verification.
The right of pledge for real estate and vehicles is subject to state registration.
The loan to collateral ratio cannot exceed 80%.
The guarantor should possess property or a share in any immovable property that belongs to him/her through the ownership right or should be a legitimate employee of any state or international organization operating in the RA, well-known in the business environment and having good reputation, or should be a CO client, with the CO having financial analysis regarding the client’s solvency, performed not more than 6 months before.
- - In case of cash operations with commercial banks and payment organizations, the customer may be required to pay cash withdraw fee up to 0.25% of the amount.
- When repaying the loan principal and interest by the customer through the payment terminals payment organizations, a commission fee of 100-300 AMD will be charged for each transaction.
In case of collateralized loans, possible costs of the customer for the services provided by third parties.
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Property Pledging Articles |
Property Pledging Costs |
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Real Estate |
Vehicles |
Other movable property |
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Pledge value estimation |
15,000 – 80,000 |
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Certificate on pledge release from the ban |
10,000 |
3,000 |
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Notarization of the agreement |
10,000 – 20,000 |
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State registration of the right for the pledge |
3000 – 26,000 |
3,000 |
2,000 |
Leasing Application Confirmation
The decision on leasing application is made within 15 days after receiving the application. The customer is informed about that on the same day.
Factors for Confirming the Leasing Application
- presence of actual activity in the regions of RA
- correspondence to the requirements of financing programs and funds
- correspondence of paying capacity to the requirements defined by the company
Factors for Rejecting the Leasing Application
The applicants who do not meet the above mentioned requirements for leasing or when the solvency of the applicant is not sufficient, the applicants cannot use the lease services provided by the company.
Upon the applicant’s wish the company can present a written rejection letter.
Documents Required for Leasing:
For legal entities:
- Copy of the state registry certificate
- Copy of the company foundation contract
- Copy of the company legislation
- Financial statements
- Founders’ decision on pledging the company property
- Copies of property certificates
- Statement from the order of appointment of the director or the order copy
- Copy of the director’s identification document
- In case of pledging equipment, the passports of those
- In case of pledging vehicles, copies of their technical passports
For physical entities:
- Leasing application
- Identification document, social security card/public service identification number or a statement of its absence
- Documents stating property of the pledge as an additional liability
- In case of pledging equipment, the passports of those
- In case of pledging vehicles, copies of their technical passports
- Statements of income (salary, etc.)
Attention
. You have the right to communicate with the credit institution in the way you prefer, by mail or electronically. Receiving information electronically is the most convenient. It is available 24/7, free from the risks of paper information loss and ensures privacy. In the case of foreign currency loans, loan repayments may be affected by differences in foreign currency exchange rates.
. The actual interest rates of loans in US dollars were calculated based on the average exchange rate of the US dollar published by the Central Bank of Armenia on 17/02/2023. The actual annual interest rate may change depending on the change in the magnitude of the exchange rate published by the Central Bank of Armenia.
. In case of a change of 2 or more percentage points in the bank interest calculation rate set by the Central Bank of the Republic of Armenia, the organization can revise the current loan interest rate, but not more than twice the current bank interest rate.
. Your property (home, car, or other) may be seized if you fail to make your interest and loan payments on time.
. In case of non-fulfilment or incomplete fulfillment of the obligation by you, the lender sends the data to the credit bureau after 3 working days, where your credit history is formed. You have the right to get your credit history from the credit bureau once a year for free.
Attention: a bad credit history can prevent you from getting a loan in the future.
. In case of non-fulfillment of obligations by the borrower, the obligations can be paid off at the expense of other property of the borrower, if the collateral is not sufficient to repay the obligations at the expense of the collateral (at the expense of the money received from the sale of the subject of the collateral).
In case of non-performance of obligations for the repayment of credit expenses (at the expense of the amount obtained from the realization of collateral), the obligation may be redeemed at the expense of lessee’s other property.