Under the Subcomponent, the project must provide for establishment of a new processing enterprise (except for production of energy-efficient stoves) in one of the following areas:

• processing and preservation of meat and production of meat products;
• production of dairy products;
• processing and preservation of fruit and vegetables;
• processing of walnuts and other nut crops (except hazelnuts);
• processing of wool, hides, and non-food products of animal origin;
• tea processing;
• production of essential oils, bay leaf products, spices, and seasonings;
• production of compound feed for agricultural animals, poultry, and fish;
• production of milled and cereal products and grain processing (except wheat flour production);
• processing of honey and other beekeeping products;
• processing and preservation of fish, crustaceans, and mollusks;
• production of wine, spirits, and alcoholic beverages;
• production of briquettes and pellets, as well as production of charcoal from such briquettes/pellets and/or timber and/or bay leaf waste;
• establishment of a new enterprise or modernization/expansion of an existing enterprise for production of energy-efficient stove(s).
  
  

The Subcomponent is available to an entrepreneurial legal entity in which the State holds no ownership interest, participation interest, or shares.

In addition, the potential beneficiary must be registered in:

• the Registry of Farms and Rural Enterprises
• the Registry of Economic Activities of the Legal Entity under Public Law - National Agency of Public Registry
  
  

Geographic Coverage

The Subcomponent applies in all municipalities of Georgia, except self-governing cities.

Establishment of a new enterprise or modernization/expansion of an existing enterprise for production of energy-efficient stove(s) shall be financed throughout Georgia.

Agency co-financing: up to 40% of the total project cost, but not more than GEL 2,000,000.

In the case of cooperatives holding agricultural status, villages adjacent to the dividing line, and high-mountain settlements - up to 45%, but not more than GEL 2,000,000.

If the potential beneficiary/beneficiary uses the Preferential Agrocredit for Fixed Assets Component (except the Subcomponent for Timber-Harvesting Machinery), 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.

The total project cost must be at least GEL 500,000, and in the case of wine production, at least GEL 1,000,000.

Only the creation/acquisition of fixed assets may be financed:

• costs related to construction of buildings/structures, including value-added tax and the costs of transportation and installation of machinery/equipment;
• provision of the enterprise with the relevant utility connections.
  
  

Under the Co-Financing of Processing Enterprises Subcomponent, before execution of the agreement the potential beneficiary must submit a business plan and financial statements, which shall be reviewed by the Commission.

The submitted project must provide for establishment of a new enterprise.

This condition shall not apply to production of energy-efficient stoves.

In the case of wine production, only an enterprise meeting the criteria and costs permitted under Annex No. 14 shall be financed.

Project Implementation Period

The Agency shall determine the project implementation period for the beneficiary.

The project implementation period shall not exceed 24 months from the date of execution of the agreement.

If the project is not completed within the prescribed periods, the Agency shall terminate the agreement executed with the beneficiary.

Criteria and Obligations

The potential beneficiary must own the land plot on which implementation of the project is planned; the land plot must be free of attachment and registered with the Legal Entity under Public Law - National Agency of Public Registry; and, if acquired 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 founder and/or personnel of the potential beneficiary must possess appropriate knowledge and experience in conducting business;

The project submitted by the potential beneficiary must be designed to process at least 50% locally sourced raw materials.

This condition shall not apply to production of compound feed for agricultural animals, poultry, and fish or to production of energy-efficient stoves.

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.

See the format of the Business Plan and Financial Statements.

In the case of co-financing for wine production:

• the potential beneficiary must own at least 5 ha of vineyard that, as of the date the application is submitted to the Agency, was planted at least 10 years earlier;
• the beneficiary must supply at least 50% of production with its own raw material (grapes) harvested from such vineyards;
• the foregoing vineyards must be located no more than 20 kilometers from the enterprise to be financed;
• the beneficiary must purchase the remaining grapes required for production from vineyard(s) planted at least 10 years earlier and located no more than 20 kilometers from the enterprise;
• for three seasons during the year following disbursement of co-financing, the beneficiary must process at least 100 tons of grapes in each season and, at the end of each season, submit information regarding the grapes processed;
• the vineyard owned by the beneficiary, from which the grapes to be processed by the beneficiary for production are harvested, must be insured for the three seasons following commencement of production.
  
  

The beneficiary shall:

• for the term of the agreement, encumber in favor of the Agency, by mortgage and pledge in accordance with the legislation of Georgia, the fixed assets created/acquired under the project (including buildings/structures).

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

• ensure registration with the Legal Entity under Public Law - National Agency of Public Registry of a restriction on disposal of the ownership interest(s) in the enterprise.
  
  

General Terms:

• Potential beneficiaries may participate if they have no ongoing contractual breach and/or litigation under projects/programs of the Rural Development Agency.
• The total cost of the submitted project must include the full amount of eligible costs under the Component.
• The cost of an audit report may be financed; co-financing shall not exceed 1% of the project cost and in any event shall not exceed GEL 20,000. The co-financing amount shall be included within the Agency co-financing limit applicable to the beneficiary.
• 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.
• Fixed assets to be purchased (plant/equipment/machinery/implements) must be new (not previously placed in service).
• A potential beneficiary may not participate in the Program, and co-financing shall not be disbursed to a beneficiary, if:
  • the potential beneficiary or existing beneficiary, or its founder, member, or shareholder, holds an ownership interest in a legal entity registered in accordance with the legislation of Georgia that supplies the relevant goods and/or services under the project;
  • the individual entrepreneur itself acts as the supplier of goods and/or services;
  • the potential beneficiary/beneficiary or its representative serves as a manager of the company supplying the goods and/or services.
  • Beneficiaries with whom a co-financing agreement is executed shall receive co-financing provided that, after this Resolution enters into force, they have no ongoing contractual breach and/or litigation under projects/programs of the Non-Entrepreneurial (Non-Commercial) Legal Entity - Rural Development Agency.
    
    

General Obligations:

• 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.

Steps Required to Receive Co-Financing

List of documents to be submitted under the Co-Financing of Processing Enterprises Subcomponent

Co-financing shall be disbursed after performance of the obligations under the agreement is confirmed by the submitted audit report 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

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.

A completed application form and supporting documentation may be submitted in hard copy to the central office of the Rural Development Agency, its regional divisions, or information and consultation centers.

The foregoing documentation may also be submitted to the Agency by email at: document@rda.gov.ge .

The documentation must be accompanied by an application regarding submission of a new application.