Agricultural producers can now apply for discounted loans

Commercial banks are ready to give out discounted loans to support the agricultural sector within the scope of the government’s 10 trillion MNT stimulus program, the Ministry of Finance announced on Monday.

Local banks have started accepting applications for three types of agricultural support loans.

The stimulus program has allotted 500 billion MNT for three types of discounted loans for the agricultural sector, which are capped as follows:

• 100 billion MNT in loans for spring plantation (maturity of one year)

• 200 billion MNT in loans for cashmere preparation (maturity of one year)

• 200 billion MNT in loans for supporting herders (maturity of three years)

The loan designed to support spring planting will provide working capital to agricultural enterprises, as well as refinance their loans to help them sustain their business.

The cashmere preparation loan is available for enterprises with advanced processing factories (combing or higher level) to purchase new raw cashmere and refinance previous loans, while the herder support loan will be designated to herders and livestock owners on similar bank terms.

The Ministry of Finance provided an update on other soft loan programs running under the stimulus program.

• 9,304 individuals and enterprises received a total of 639.3 billion MNT in employment support loans. While enterprises loaned 353.3 billion MNT, individuals received 286 billion MNT. Out of loan applications requesting 5.5 trillion MNT in total, banks are reviewing applications amounting to 1.7 trillion MNT.

• Mongol Bank approved repo financing of 310 billion MNT to 1,766 borrowers.

• 3,170 people were granted 233 billion MNT in mortgages with annual 6 percent interest rate.

The ministry and Mongol Bank have negotiated with some banks to lower lending criteria to speed up loan issuance and increase its accessibility. In particular, the requirement that businesses must have operated in the last six consecutive months has been eased to “business can have disrupted for up to six months during pandemic”. Banks are calculating income based on people/business’s 2019 income and also when reviewing credit record, disruptions will be overlooked, which means that loan applicants can pass this criteria as long as they’ve managed to fully repay their previous loans.