Subcomponent for financing the food and energy efficient industries

1. Within the subcomponent, the loans are issued for the establishment of new enterprises and the financing of the expansion / re-equipment of the existing ones.
2. The total amount of the loan (s) issued to one beneficiary under the subcomponent shall not be less than 1,500,000 (one million five hundred thousand) GEL and shall not exceed 10,000,000 (ten million) GEL.
3. For loans approved by a commercial bank, which meets the criteria set forth in this sub-component, but the total volume of which exceeds the maximum volume specified by the same sub-component, the annual interest rate established by the commercial bank shall be determined on the basis of the resolution of the Government of Georgia.
4. In case specified in the paragraph 3 above, for the purpose of co-financing the annual interest rate on the loan approved by a commercial bank for the beneficiaries, an entrepreneur with appropriate justification shall apply to the Agency, which, in turn, submits the issue for the review through the Ministry of Environment Protection and Agriculture to the Government of Georgia.
5. Under the subcomponent, loan (s) are issued for the following purposes:

 A.a) Financing of primary agricultural companies:

 A.b) Livestock farm (dairy-meat);

A.c) Pig farm;

A.d) Poultry farm;

A.e) Farm of animals with valuable fur;

A.f) Fish production;

A.g) Beekeeping;

A.h) Seedlings and nurseries;

A.i) Perennial agricultural crop gardens, orchards, plantations and others (purchase of seedlings is allowed only from the local nurseries designated by the "Plant the Future" state program and/or through imports).

B) Financing of agricultural products processing plants:

B.a) Fruits, berries, vegetables, mushrooms, citrus processing;

B.b) Walnuts and hazelnuts, ground hazelnuts and other processing;

B.c) Wool and leather processing;

B.d) Bay leaf, tea, tobacco processing;

B.e) Meat and milk processing;

B.f) Vegetable fats (oil, margarine, butter) and halva production;

B.g) Essential oils and spices production;

B.h) Slaughterhouse arrangement;

B.i) Beekeeping processing;

B.j) Agricultural animals, birds and fish food production;

B.k) Producing wine and alcoholic beverages obtained as a result of grape processing under the following conditions:

B.k.a.) The borrower is obliged, during the next 5 years after receiving the first tranche of the loan, to process an additional 1 ton of grapes on the largest volume of grapes processed during the harvest season for last 3 years of each year, calculating by each GEL 5,000 received;

B.k.b.) If the borrower has not processed the grapes during the harvest season in the last 3 years, within the next 5 years after receiving the lease, it shall be obliged to process 1 ton of grapes calculating by each GEL 5,000 received.

B.k.c.) The first year of fulfillment of obligations is determined by the harvest season of the year following the receipt of the first tranche of the loan.

C) Financing of infrastructural facilities:

C.a) Agricultural products storage warehouses;

C.b) Grain dryers;

C.c) Agricultural product storage refrigerators;

D) Following types of activities can be financed by the loan (s) within the subcomponent:

D.a) Repair and arrangement of existing buildings;

D.b) Construction and arrangement of new buildings;

D.c) Purchase and installation of technological lines, climate control equipment and tools, freezing devices, power generators, irrigation systems, milking equipment, feed preparation and others;

D.d) Connection to water, electricity and natural gas supply sources and sewerage;

D.e) Fencing of agricultural facilities, arrangement of protection systems;

D.f) Purchase and installation of storage chambers, racks, tanks and other technological equipment for storage;

D.g) Purchase of special equipment and trailers (loaders, manure carriers, feed selecting and supplying equipment and others) required for the operation of the enterprise;

D.h) Purchase of breeding and highly productive livestock (except of cattle), poultry, fish, precious animals; 

D.i) Construction and arrangement of fish tanks and ponds;

d.j) Planting, caring for and restoring perennial plants, including:

d.j.a) Stone and seed fruit species;

d.j.b) Walnut species;

d.j.c) Berry cultures;

d.j.d) Citrus and other subtropical cultures;

d.j.e) Tea, bay leaf and other technical cultures;

d.j.f) Woody and fast-growing plant species

d.k) Energy efficient facilities:

d.k.a) Production of energy efficient furnaces; 

d.k.b) Fuel-producing facilities for energy-efficient furnaces

6. Within the framework of the subcomponent, the following activities are not allowed to be financed by loan (s):

 a) Purchase of land;

 b) Purchase of existing agricultural buildings, greenhouses and others;

 c) Purchase and repair of agricultural machinery (tractor, combine, etc.), as well as trailers (plow, harrow, sowing, fertilizer, etc.);

d) Purchase, repair of vehicles (except for special equipment and vehicles integrated with non-stationary technological lines), flying and floating vehicles;

e) Construction, repair and equipping of office space only.

      7. Under the program, loan will be issued by a commercial bank:

a) For financing fixed assets - not less than 80 percent of the total volume of the loan (s);

b) For financing working capital - not more than 20 percent of the total volume of the loan (s).

      8. Within the subcomponent, the funded company must meet the following minimum requirements:

a) Company must meet the safety, environmental protection, sanitary and food safety requirements defined by the legislation of Georgia;

b) The buildings and the surrounding area of ​​the company must have an aesthetic external appearance.

     9. The annual interest rate determined by a commercial bank for the use of a loan issued to a beneficiary within the framework of this subcomponent shall be determined as follows:

a) From 1,500,000 (one million five hundred thousand) GEL to 3,000,000 (three million) GEL - not more than 5 (five) percent added annually to the refinancing rate established by the National Bank of Georgia;

b) From 3,000,000 (three million) GEL to 10,000,000 (ten million) GEL - not more than 4 (four) percent added annually to the refinancing rate established by the National Bank of Georgia.

     10. The Agency shall co-finance the interest of not more than 36 months of the loan issued within the subcomponent in the amount of 11% per annum for not more than 38 months after the issuance of the loan.

    11. A loan issued by a commercial bank under the subcomponent shall be secured by the Agency in the amount of 50% of the principal amount of the loan, but not more than 2,500,000 (two million five hundred thousand) GEL, unless the loan is issued to facilitate expansion / re-equipment of existing enterprises. This collateral is secondary and is valid for no more than the next 38 months after the loan is issued. The commercial bank will have the right to use the secondary collateral only after the full realization of the primary loan collateral, based on the relevant written application to the Agency by the commercial bank. If the commercial bank fails to receive 100% of the remaining principal amount of the loan under the program as a result of realization of the primary collateral, the Agency will provide a difference of not more than 50% of the remaining principal amount of the loan, but not more than 2,500,000 (two million five hundred thousand) GEL.

     12. In order to secure a loan, the loan issuer must first request any asset created and/or purchased by the new enterprise (fixed assets, commodity stocks, etc.) and only then, if necessary, additional collateral.

      13. The commission fee for the loan issued by a commercial bank within the subcomponent shall not exceed 0.2%.

      14. It is allowed to refinance a loan issued only within the same sub-component, only if the re-financing remaining on the refinancing loan, principal amount and the term of the co-financing do not increase.

    15. Within the scopes of the sub-component parallel loan may be issued, if the sum of parallel loans does not exceed the maximum limit of the lease determined per beneficiary under this subcomponent and the amount of each parallel lease is not less than the minimum limit amount (the sum of leasing and loans issued for the subcomponent of the preferential Agro-leasing fixed assets component for financing the food industry must not exceed GEL 10 000 000);

    16. In case of refinancing of the loan, the commission fee that does not exceed the fee imposed by the National Bank for such cases shall apply.

     17. Restructuring of a issued loan within the subcomponent is permissible only if the total amount to be paid by the Agency in the form of co-financing on the loan, which was provided for in the terms of the primary loan, does not increase.

     18. In case of early repayment of the loan, the beneficiary will not be charged a prepayment fee or penalty to the commercial bank (this does not apply to loans issued with financial resources allocated by the EBRD).

     19. In case of failure to pay the amount within the timeframe specified in the loan repayment schedule, the commercial bank is authorized to impose a fine on the beneficiary only for the principal amount to be paid. Such a fine shall not exceed 0.1% of the overdue principal amount for each overdue day.

   20. The agency monitors the fperformance of obligations by the program participant and the targeted spending of loans granted within the sub-component. Time and form of monitoring will be defined by the agency. In case of confirmation of the terms defined by the project, the agency will act according to the agreements concluded with the commercial banks and program participants and acting rules and procedures of the agency. In addition, the program participant is obliged, to ensure a full spend of the tranche during 6 (six) months from receive of each tranche  (any purchase implemented with the amount of the loan (except the service) should be implemented by the entrepreneur physical/legal entity registered under the rule defined by legislation of Georgia or through import)  and for confirmation of the loan purpose to submit the audit report in the financial institution (except the refinanced loan) (for the loans approved including 500 000 Gel, the entities in the register of the "Accounting, Reporting and Audit Supervision Service" of the state sub-agency institution included in the system of the Ministry of Finance of Georgia, who have I, II,  III or IV category; For the loans approved from 500,001 Gel, the entities in the register of the "Accounting, Reporting and Audit Supervision Service" of the state sub-agency institution included in the system of the Ministry of Finance of Georgia, who have I, II, or III category or LEPL "Levan Samkharauli National Bureau of Forensic Expertise”). The audit report should be submitted to the financial institution during the next 7 months from issue of the loan or its tranche. If in the mentioned term, the participant does not submit the audit report, the agency will cancel the co-financing, and if during 12 months does not submit the audit report, the agency will cancel the co-financing and secondary provision. 

    21. Co-financing of interest shall be terminated by the Agency upon the following circumstances:

  a) Full repayment of the loan or 36 months after the loan is issued;

  b) Non-fulfillment of obligations under the agreement concluded with the relevant commercial bank by the beneficiary, in particular, the co-financing by the Agency shall be suspended during the overdue payment, and in case of receipt of a writ of execution or transfer of the subject of collateral, the co-financing of the Agency shall be terminated;

 c) Fulfillment of the obligations under the subcomponent by the Agency, commercial bank and the beneficiary in compliance with the conditions established by this component;

 d) Inappropriate restructuring and refinancing of the loan terms issued within the sub-component;

 e) Violation of loan terms issued by a commercial bank. In such a case, the commercial  bank shall be imposed the penalty provided for in the contract. However, the Agency shall make a decision on termination of funding in accordance with the rules and procedures established by the Agency;

 f) In case of significant breach of obligations by the beneficiary.  

22. Within the framework of the sub-component, it is allowed to pay off the documentary letter of credit opened in the servicing bank, with the loan amount, only for the assets purchased through import.