Iran’s Information and Communications Technology Park, affiliated to the ICT Ministry, plans to pay cheap loans to firms based in the park to help boost the country’s tech ecosystem and digital economy.
Ehsan Chitsaz, a market development deputy at the park, said the financial support amounts to 100 billion rials ($390,000) plus €5 million, within different packages, ISNA reported.
He said based on the initiative, firms can apply for loans and receive up to 4 billion rials ($15,600) within 48 hours, which should be repaid with a 14% interest.
According to the official, enterprises seeking to create business clusters may also apply for loans worth 2.5 billion rials ($9,700) to increase their productivity and competitiveness, nationally and globally.
A business cluster is a geographic concentration of interconnected businesses, suppliers and associated institutions in a particular field.
Chitsaz noted that facilities will be available for the park's ICT firms and startups working in the digital economy through partnership with private investors to help them introduce their products and services to domestic and foreign markets.
The ICT Ministry’s Information Technology Organization paid 919 billion rials ($3.6 million) in cheap loans to ICT firms in 14 months since January 2019.
Close to 19% of the loans were paid to curb the impact of coronavirus on startups. Loans to establish business-to-business infrastructures accounted for 18% while tech firms offering on-demand services have received another 18% share of the loans.
According to ITO, tech units producing modems and smartphones, and developing data centers, content developers and data transmission project managers, as well as mobile game and application developers, have received the remaining share of the financial assistance.
The organization reported that the loans had been allocated through the ICT Ministry’s Innovation Fund. Approved by the Cabinet in May 2019, the fund has served as the ministry’s arm for supporting tech firms.
The fund is established with an initial capital of 1 trillion rials ($3.9 million), with the ministry contributing 20% and the rest coming from the private sector. The fund identifies and helps fledgling startups and tech firms launch their businesses.
The initiative was expected to grow into a permanent sponsor of innovative community, creating mental and commercial safety for the entrepreneurs.
Ministry Measures
In line with the fund’s goals, the ICT Ministry announced that it has provided 1.4 trillion rials ($5.47 million) in loans to startups and tech firms in the last Iranian year (ended March 20, 2021).
According to the ICT Ministry, it is the largest sum ever lent to tech firms in recent years.
The technology ecosystem is supported by several entities, especially the Vice Presidential Office for Science and Technology, which prefers to pump financial resources into well-developed tech companies and boost their activities.
The ICT Ministry has taken a different approach, focusing on providing seed capital to startups.
The startup ecosystem needs more venture capital funds than small loans. Innovation Fund has managed to invest in four startup companies, although it is only expected to provide loans.
ICT officials say the state's small coffer is not adequate for venture capital investments, because such investments entail high risks, urging private investors to join the initiative.
The ICT Ministry has developed several digital economy parks across the country to empower tech units.
Using the available capacities, digital economy parks in Mashhad, Semnan, Sari and Shiraz are working to increase the income of tech firms to 50 billion rials ($195,000) per year.
Previous Efforts
Last year, the government-affiliated Information and Communication Technologies Guild Organization planned to pay individual loans worth 20 billion rials ($78,000) to ICT companies.
The move was aimed at protecting their businesses from the loss caused by the spread of Covid-19 in the country, which has distorted Iran’s tech ecosystem’s prospects. The loans were to be financed by ITO.
The heads of commissions at ICT Guild Organization decided to offer loans worth 5-20 billion rials ($19,500-$78,000) to eligible ICT firms.
Fledgling companies and startups were given the opportunity to receive the minimum amount.
In addition, the amount of loans was determined based on a company’s date of establishment and number of insured workforce.
The lending was offered at 9% interest rate with 12-month installments.
The loans were contingent on firms pledging to maintain 90% of their business activities and not lay off their workforce.
The financial assistance helped revive knowledge-based firms that had slumped due to the negative effects of the Covid-19 pandemic.
