The Preferential Agrocredit for Fixed Assets Component provides for co-financing of interest rates applicable to loans approved for the following components of the Program:

• co-financing of primary production;
• Co-Financing of Processing and Storage Enterprises;
• co-financing for the establishment of a slaughterhouse.
  
  

as well as co-financing of interest rates applicable to loans approved under co-financing agreements executed within the Timber-Harvesting Machinery Subcomponent of the Preferential Agrocredit for Fixed Assets Component.

Terms and Obligations

To use the Preferential Agrocredit for Fixed Assets Component, a potential beneficiary must satisfy the financial institution's requirements for issuance of loans of this type and the conditions of the Program.

The Agency shall co-finance the interest payable for servicing the loan on the basis of the agreement and/or co-financing agreement.

At any stage during the period of loan co-financing, the Agency may monitor loans and take appropriate action in response to violations.

The following is permitted:

• loan restructuring, provided that, as a result of the restructuring, the aggregate amount and term of Agency co-financing do not exceed the aggregate remaining co-financing amount and term provided by the schedule as of the loan restructuring date.
• refinancing of a loan or loans, provided that the relevant loan was issued under the Preferential Agrocredit for Fixed Assets Component and, as of the refinancing date, the amount of the new loan does not exceed the outstanding principal balance of the original loan, and neither the original loan's co-financing term nor the Agency's remaining co-financing obligation is increased.
• issuance of concurrent loans, provided that the aggregate amount of the concurrent loans does not exceed the maximum loan limit established for the beneficiary under the Preferential Agrocredit for Fixed Assets Component (except the limits established under the Timber-Harvesting Machinery Subcomponent) and the amount of each concurrent loan is not less than the minimum loan-limit amount.
  
  

Loan amount: from GEL 15,000 through GEL 4,000,000, inclusive.

The loan term shall be determined by agreement between the beneficiary and the lending financial institution.

The loan interest rate shall be determined based on the amount of the loan. The loan interest rate may be fixed or floating (variable):

In the case of a fixed interest rate, the financial institution shall establish the following annual interest rates:

In the case of a floating (variable) interest rate, the financial institution shall establish the following annual interest rates:

Under the Component, the Agency shall co-finance interest for a period of up to 36 months, at an amount equal to the refinancing rate established by the National Bank of Georgia, during a period not exceeding 38 months from disbursement of the loan or its first tranche; provided, however, that loan co-financing shall be disbursed after the beneficiary confirms fulfillment of the intended purpose(s) specified in the co-financing agreement(s) executed under the Program.

The financial institution must fully disburse the loan within the following periods from execution of the agreement:

• under the Primary Production and Slaughterhouse Establishment Co-Financing Components - within 15 months;
• under the Co-Financing of Processing and Storage Enterprises Component - within 21 months.
  
  

The loan must be disbursed no later than one month after execution of the agreement.

The financial institution's fee for issuance of the loan shall not exceed:

• for loans up to GEL 50,000 - 0.5%;
• for loans of GEL 50,001 or more - 0.2%.
  
  

If the loan is prepaid, the beneficiary shall not incur any prepayment fee/penalty payable to the financial institution.

If the amount due under the repayment schedule is not paid by the date specified in the schedule, the financial institution may charge the beneficiary a penalty only on the principal amount due, not exceeding 0.1% of the overdue principal amount for each day of delay.

If the loan is refinanced by another financial institution, the applicable fee shall not exceed the rate established by the National Bank of Georgia for such cases.

The loan repayment schedule shall be determined on the basis of the agreement executed between the beneficiary and the financial institution.

Agency co-financing of the loan shall terminate:

• upon full repayment of the loan;
• if the beneficiary fails to perform the obligation(s) under the agreement;
• if the obligation(s) under the co-financing agreement are not performed;
• in the event of a breach of other conditions of the Program;
• if the financial institution obtains a writ of execution;
• after 2 months have elapsed from the final date for payment of loan co-financing specified in the loan schedule.
  
  

General Terms

• Only capital expenditures contemplated by the project submitted by the potential beneficiary shall be financed.
• The total cost of the submitted project must include the full amount of eligible costs under the Component.
• Any procurement contemplated by the project shall be carried out by the beneficiary only after execution of the agreement, from an entrepreneurial natural person and/or legal entity registered in accordance with the legislation of Georgia and/or through importation.
  In the case of procurement of services, procurement from a natural person shall also be permitted (except under the Storage and Processing Enterprises Component).
• Fixed assets to be purchased (plant/equipment/machinery/implements) must be new (not previously placed in service).
• If the beneficiary uses the Component, the amount of loan-interest co-financing actually paid/payable by the Agency for the beneficiary shall be deducted from the co-financing amount to be disbursed to the beneficiary under the project.
  
  

Obligations

The beneficiary shall:

• for three years from the date of disbursement of co-financing, not alienate the property created and financed under the project, any part of such property or related assets, or the land plot on which the project was implemented.

In the event of a breach, the Agency shall terminate the agreement and the beneficiary shall be required to refund the co-financing amount received.

• for three years from the date of disbursement of co-financing, ensure that the project operates solely in accordance with the intended purpose and profile established by the Program and/or the agreement.
• in the case of construction, submit, within the period determined by the Agency, the commissioning/acceptance certificate for the building/structure created under the project.
• submit information on project progress to the Agency at the intervals specified in the agreement.

In the event of a breach of the foregoing conditions, the Agency shall terminate the agreement and the beneficiary shall be required to refund the co-financing amount received, or the Agency may grant the beneficiary an additional period to perform the obligation.

Eligibility Criteria for a Potential Beneficiary

The potential beneficiary must own, co-own, or lease the land plot on which implementation of the project is planned, and such land plot/lease must:

• be registered with the Legal Entity under Public Law - National Agency of Public Registry and/or have been obtained under a long-term lease from the State, a municipal authority, or the Autonomous Republic of Adjara.
• have a remaining lease term of at least 10 years;
• the land plot must be free of attachment; in addition, if purchased from the State subject to privatization conditions, such privatization conditions must have been fully satisfied and the land plot must constitute the purchaser's unconditional property.

The potential beneficiary must have no outstanding tax liability to the State Budget. This requirement shall not apply where the amount of tax liability does not exceed GEL 1,000, collection of the tax liability has been deferred, or the obligation to pay it has been suspended by operation of law.

Steps Required to Receive Co-Financing

Co-financing shall be disbursed after performance of the obligations under the agreement is confirmed by an audit report evidencing performance of the obligations under the agreement and by an on-site inspection conducted by the Agency.

In the case of construction, a construction permit issued in accordance with the legislation of Georgia must be submitted.

For construction/repair/reconstruction works with a value of at least GEL 200,000, the value of the completed works must be confirmed by:

• a report issued by a person accredited by the Legal Entity under Public Law - National Accreditation Body (Accreditation Center)
  or
• an expert report issued by the Legal Entity under Public Law - Levan Samkharauli National Forensics Bureau
  
  

If the project cost is at least GEL 500,000, before co-financing is disbursed the beneficiary shall, for the term of the agreement, mortgage in favor of the Agency, in accordance with the legislation of Georgia, the land plot on which the project was implemented.

The Agency's mortgage may rank second only where the first-ranking mortgagee is the lending bank.

During the term of the agreement, the Agency may conduct on-site inspections and documentary monitoring.