Nearly 85 percent of bank loans issued to Iranian businesses during the first seven months of the Iranian calendar year were used to finance working capital, according to new figures released by the Central Bank of Iran on Thursday, November 5. The data highlights the extent to which bank financing is directed toward maintaining existing economic activity rather than establishing new businesses or expanding production capacity.
The Central Bank reported that Iranian banks issued approximately 9,241 trillion tomans in loans between March 21 and October 22, 2026, an increase of 65.9 percent compared with the same period last year. Of that amount, 77.4 percent went to businesses, while 22.6 percent was allocated to households. The figures exclude an additional amount of lending provided through credit cards when calculating the reported household share.
Of the loans issued to businesses, 84.6 percent, equivalent to approximately 6,049 trillion tomans, went toward working capital. This includes financing for raw materials, inventories, wages, and other expenses necessary to maintain daily operations. The concentration was even higher in industry and mining, where 88.7 percent of lending was devoted to working capital. These sectors received approximately 3,213 trillion tomans in total loans, of which about 2,851 trillion tomans went toward financing existing operations. Industry and mining alone accounted for 47.1 percent of all working-capital loans issued to businesses across the economy.
The latest figures closely resemble those released for the first six months of the year, when working capital accounted for 85 percent of business lending and 89.4 percent of loans to industry and mining. The slight decline in these shares during October does not substantially change the broader picture: the overwhelming majority of bank financing available to Iranian businesses continues to support ongoing operations rather than new investment.
Working capital financing is an essential part of any functioning economy. Manufacturers need credit to purchase materials before selling finished products, retailers borrow to maintain inventories, and service companies often require short-term financing to cover expenses while awaiting payments from customers. A high share of working-capital lending does not necessarily indicate that businesses are struggling. Even profitable and expanding companies depend on such financing.
However, the persistence of this pattern in Iran raises questions about the availability of longer-term financing for investment, particularly as businesses confront inflation, currency volatility, sanctions, and disruptions associated with the war. For many Iranian companies, the cost of maintaining existing production has increased considerably. A manufacturer that previously required a certain amount of financing to purchase a month’s supply of raw materials may now need substantially more money to purchase the same quantity. Rising transportation costs, exchange-rate fluctuations, and difficulties obtaining imported components can further increase the amount of credit required to maintain production.
Although total bank lending increased by 65.9 percent compared with the previous year, much of that growth may reflect the rising cost of doing business rather than an expansion in economic activity.
These pressures have been compounded by the uncertainty surrounding the conflict and its economic consequences. Damage to infrastructure, interruptions in transportation and commercial activity, and uncertainty about future economic conditions can complicate business planning and discourage commitments to long-term projects. Factories require working capital to continue operating, but they also need investment in machinery, technology, infrastructure, and additional production capacity to improve productivity and expand output.
Financing existing operations and financing future growth serve different purposes. Working-capital loans help businesses maintain production and employment in the short term, while longer-term investment can increase productive capacity and create additional jobs.
The Central Bank’s statistics do not indicate that investment has stopped. Companies may finance expansion through retained earnings, private investment, or other sources outside the banking system. Nor do the figures establish how much of the working-capital lending went to companies facing financial difficulties rather than healthy businesses managing their normal cash flow.
Nevertheless, the allocation of nearly nine out of every ten industrial loan tomans to working capital leaves a relatively limited share of bank lending for other purposes, including investment in new production facilities and equipment.
For smaller businesses, the challenge can be especially difficult. Small manufacturers, suppliers, workshops, transportation companies, and service providers often have fewer financial reserves than large corporations and may depend more heavily on timely payments and access to bank credit. A delay in receiving payment from a customer, an unexpected increase in material prices, or an interruption in transportation can create immediate financial pressure. Companies may need additional borrowing simply to maintain existing operations, even when their production volumes remain unchanged.
These difficulties can spread through supply chains. When a manufacturer delays paying its suppliers, those businesses may struggle to meet their own obligations. Financial pressure can consequently move from one company to another, affecting workers, contractors, and smaller enterprises that depend on larger customers.
The consequences also extend to employment. Businesses facing uncertainty about future costs and demand may postpone hiring, delay investment, or reconsider expansion plans. Even when companies avoid layoffs and continue operating, the absence of new investment can limit opportunities for workers entering the labor market.
The Central Bank’s report also provides a picture of household borrowing. Iranian households received approximately 2,091 trillion tomans in loans during the seven-month period, accounting for 22.6 percent of the reported lending total before the additional credit-card financing adjustment.
Of the loans allocated to households, 42.7 percent were classified as financing for personal goods purchases. This category accounted for approximately 894 trillion tomans. The figures demonstrate the different demands placed on Iran’s banking system. Businesses require credit to finance production and commercial activity, while households seek financing for consumption and other financial needs. Both groups operate in an economy where inflation and uncertainty can complicate financial planning.
Iranian banking authorities have presented the large share of working-capital lending as evidence that banks are prioritizing the financing of production. From that perspective, directing credit toward existing businesses can help prevent interruptions in economic activity and protect employment.
There is an important economic rationale for this approach. During periods of instability, access to short-term financing can determine whether otherwise viable businesses are able to continue operating. Maintaining production capacity can also make eventual economic recovery easier by preventing the permanent closure of enterprises and the loss of skilled workers.
At the same time, maintaining existing production is not the same as creating the conditions for sustained economic growth. An economy can continue producing goods and services while experiencing insufficient investment in new equipment, infrastructure, and productive capacity. Over time, this can weaken productivity, limit job creation, and make businesses less competitive.
For Iran, the challenge is complicated by restrictions on international banking and trade, which limit access to foreign financing and can increase the cost of importing equipment and industrial materials. Domestic inflation, currency instability, and uncertainty over economic policy create additional obstacles to long-term planning.
The war also limits the ability to plan for the long-term. Businesses considering investments that may take several years to generate returns must assess not only ordinary commercial risks but also the possibility of renewed military escalation, infrastructure damage, and further disruption to trade and transportation. A reduction in military tensions could improve confidence and allow some businesses to resume postponed investment plans. Improved international financial access could also ease difficulties associated with cross-border payments and the purchase of imported equipment.
However, a lasting recovery would require more than an end to immediate military threats. Businesses would still need greater predictability in economic policy, manageable inflation, reliable infrastructure, and access to financing suited to long-term investment. For ordinary Iranians, these issues affect much more than banking statistics. The ability of businesses to expand influences employment opportunities, wage growth, productivity, and the availability and cost of goods and services.
The Central Bank’s latest report does not establish that Iranian businesses are borrowing primarily to avoid bankruptcy, nor does it demonstrate that productive investment has ceased. It does, however, show that the country’s banking system remains overwhelmingly focused on financing the continuation of existing business activity. Whether Iranian companies can move beyond meeting immediate operating expenses and begin investing more extensively in future production will be an important indicator of the country’s economic prospects, particularly as it confronts the combined consequences of inflation, sanctions, and war.