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FINANCE DEPARTMENT SME Credit Management and Monittoring Division Nedret Ugur YAVUZ SME EXPERT

FINANCE DEPARTMENT SME Credit Management and Monittoring Division Nedret Ugur YAVUZ SME EXPERT. KOSGEB SME CREDIT SUPPORT PROGRAMS. APRIL 2013 ANKARA. FINANCIAL ENVIRONMENT OF TURKISH SMEs. FINANCIAL ENVIRONMENT OF TURKISH SMEs. INSUFFICIENT CAPITAL

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FINANCE DEPARTMENT SME Credit Management and Monittoring Division Nedret Ugur YAVUZ SME EXPERT

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  1. FINANCE DEPARTMENT SME Credit Management and Monittoring Division Nedret Ugur YAVUZ SME EXPERT KOSGEB SME CREDIT SUPPORT PROGRAMS APRIL 2013 ANKARA

  2. FINANCIAL ENVIRONMENT OF TURKISH SMEs

  3. FINANCIAL ENVIRONMENT OF TURKISH SMEs • INSUFFICIENT CAPITAL • LACK OF KNOWLEDGE OF FINANCIAL SOURCES • DIFFICULTY TO REACH CREDIT AND LOANS • HIGH COST OF FUNDING • COLLATERAL REQUIREMENTS • (to help to overcome the collateral problems, • KGF became a part of the Protocols signed • between KOSGEB and the Banks) • POOR FINANCIAL INSTRUMENTS • ABSENCE OF A CLEAR LEGAL FRAMEWORK FOR MICROFINANCE INSTITUTIONS

  4. SMEs’ Finance Problems • working capital, • expansion of the existing enterprise, • export and • new employment

  5. Problems of SMEs in Obtaining Finance from the Banks SMEs believe that Banks • Charge too much • Have high collateral requirements • Lack of risk capital • Concentrating too much on risks • Not valuing adequately the qualities/projects of the enterpreneur

  6. KOSGEB SME CREDIT SUPPORT PROGRAMS THE ROLE OF KOSGEB IN SOLVING THE FINANCIAL PROBLEMS OF SMEs

  7. FINANCIAL ENVIRONMENT OF TURKISH SMEs • INSUFFICIENT CAPITAL • LACK OF KNOWLEDGE OF FINANCIAL SOURCES • DIFFICULTY TO REACH CREDIT AND LOANS • HIGH COST OF FUNDING • COLLATERAL REQUIREMENTS • (to help to overcome the collateral problems, • KGF became a part of the Protocols signed • between KOSGEB and the Banks) • POOR FINANCIAL INSTRUMENTS • ABSENCE OF A CLEAR LEGAL FRAMEWORK FOR MICROFINANCE INSTITUTIONS

  8. SMEs’ Finance Problems • working capital, • expansion of the existing enterprise, • export and • new employment

  9. Problems of SMEs in Obtaining Finance from the Banks SMEs believe that Banks • Charge too much • Have high collateral requirements • Lack of risk capital • Concentrating too much on risks • Not valuing adequately the qualities/projects of the enterprene

  10. THE ROLE OF KOSGEB IN SOLVING THE FINANCIAL PROBLEMS OF SMEs • By Starting 2003 • The Budget Sources of KOSGEB • has been allocated to SMEs • (registered and approvedin the database of KOSGEB) • low or zero interest rates • by the intermediary • State-Owned Banks • (as far as the Decision #2008/13524)

  11. LEGAL BASES of SME CREDITSUPPORT PROGRAMS • EstablishmentLaw of KOSGEB (No:3624-No: 5891) • Decisions of Council of Ministers • Decisions of ExecutiveCommittee of KOSGEB • KOSGEB Regulations • SignedProtocolswithBanks • BankingAct & Rules • TurkishCreditGuaranteeFund (KGF) OperationContract

  12. KOSGEB SME CREDIT SUPPORT PROGRAMS • The Council of Ministers Decision numbered 2004/7131 is • About the • “SME Development and Support”

  13. KOSGEB SME CREDIT SUPPORT PROGRAMS GIVES a MISSION to KOSGEB in INTEREST RATE SUPPORT on BANK LOANS toSMEsfor 3 MAIN AREAS EXPORT ACTIVITIES BUSINESS RUNNING INVESTMENT DEVELOPMENT (Not toexceed $100.000 foreach) IT IS AIMED TO PROMOTE INVESTMENT, EXPORT AND PRODUCTION EFFECTIVENESS OF SMEs

  14. STRATEGIES OF CREDIT SUPPORT SYSTEMS OF KOSGEB The budget sources of KOSGEB has been allocated to real sector • KOSGEB covers the interest rate; the interest to be paid for the intermediary banks’ loans • Banks cover the risk • Zero/low interest rate • The less paper works via web-based on-line system • Easy/quick application for SMEs • On-line implementing & monitorin

  15. STRATEGIES OF CREDIT SUPPORT SYSTEMS OF KOSGEB In accordance with the order of precedence (application order, first priority) % 30-40 of KOSGEB’s budget source will be allocated to Less Developed Region of Turkey (Eastern and Southeastern Anatolia)

  16. KOSGEB Credit Interest Rate Supports Summary (19.04.2007 - 29.02.2008) 1USD=1.300TL

  17. KOSGEB Credit Interest Rate Supports(2008-2009) Machinery & Equipment Credit Support for 1000+1000 SMEs (09.06.2008-31.12.2008) Credit Interest Rate Support for Manufacturing Handicraftsmen (Lifeline Credit) (19.08.2008-30.01.2009) Credit Interest Rate Support for Export Promotion (12.09.2008-30.01.2009) Lifeline Credit for Manufacturing Handicraftsmen Providing Employment Increase (25.11.2008-15.05.2009) SME Export Promotion Financial Support(27.02.2009- 31.12.2009)

  18. Council of Ministers’ Decision Numbered 2008/13524 allows KOSGEB to work with public banks, private banks and also domestic branches of foreign private banks the upper limit of the loan interest rate support for investment, working capital and export has been increased to300,000.-TL/SME Credit pay-back period (loan re-payment period)increased up to 48 months

  19. AMENDING LAW No: 2009/5891 AMENDING LAW No: 2009/5891 KOSGEB Foundation Law (1990/3624) come into force:22.04.2009 as well as manufacturing sectors, service sectors were included Council of Ministers was given the authority to determine the Sector And Regional Priorities of services and support given by KOSGEB for SMEs Determination Decision of Council of Ministers 2009/15431(18.09.2009) about the Sector And Regional Priorities of services and support given by KOSGEB for SMEs

  20. Credit Interest Rate Support for Export Promotion (12.09.2008-30.01.2009) Credit conditions Max. Credit limit : 100.000.-USD Non-payment term : 6 months, Credit pay-back : 6months (at once) Prerequisite : to make an export commitment

  21. Decision of Council of Ministers 2009/15431 (18.09.2009) Determination Decision about the Sectoral And Regional Priorities of services and support given by KOSGEB for SMEs This Decision has been prepared on the basis of article 3 of No. 3624 dated 12.04.1990 of Foundation Law of KOSGEB

  22. NATURAL DİSASTERS LOANSEmergency Support Loans(20.11.2009- 24.12.2010) emergency support loans to enterprise which damaged by natural disasters, civil commotions, general strikes, fires, submersion etc. İnterest rate support to SMEs (registered and approvedin the database of KOSGEB) damaged by natural disasters Max. Credit limit : 100.000TL/enterprise Credit pay-back : 24 months İnterest Rate : 0 %

  23. 3 new credit interest rate supports have been prepared based on the new decision 2009/15431 Working Capital Credit for 100.000 SMEs (growth&development of their business) Credit Interest Rate Support for Craftsmen, Artisans and SMEs (02.11.2009- 31.07.2010) Max. Credit limit : 25-30.000TL/man-woman owner Non-payment term : first 3 months Credit pay-back period : 15 months Interest Rate : ¼ for SMEs

  24. KOSGEB SME CREDIT SUPPORT PROGRAMS Within the GAP Action Plan SOUTHEASTERN ANATOLIA PROJECT ACTION PLAN (2008-2012) Protocol’s signed with the banks (20.11.2009-24.12.2010) 9 provinces (Adıyaman, Batman, Diyarbakır, Gaziantep, Kilis, Mardin, Siirt, Şanlıurfa and Şırnak) Max. Credit limit : 300.000TL/enterprise Non-payment term : first 6 months Credit pay-back period : 36 months İnterest Rate : ¼ for SMEs

  25. KOSGEB SME CREDIT SUPPORT PROGRAMS Zero Interest Rate Support for Diyarbakır Province SMEs (19.10.2009- 24.12.2010) Max. Credit limit : 30.000TL / SME Non-payment term : first 6 months Credit pay-back period : 18 months Interest Rate : 0% / SME

  26. Scale-Based Support Credit for the Growth of SMEs (22.11.2010-31.12.2011 ) Decision of Executive Committee of KOSGEB dated 19.10.2010 and numbered 2010/12 For Micro-Sized Enterprise 30.000TL For Small-Sized Enterprise 50.000 TL For Medium-Sized Enterprise 80.000 TL In case of women entrepreneurs, the upper limits of credit to be increased by 10.000.-TL

  27. Scale-Based Support Credit for the Growth of SMEs Non-payment term : first 6 months Credit pay-back period : 18 months İnterest Rate : ¼ for SMEs In the case of30.000.-TL Credit İnterest rate/profit share cost paid by KOSGEB is 2,576.-TL; 859.-TL is the interest/profit share cost paid by micro-sized enterprise

  28. Scale-Based Support Credit for the Growth of SMEs In the case of50.000.-TL Credit interest/profit share cost paid by KOSGEB was4294.-TL interest/profit share cost paid by small-sized enterprise was 1431.-TL

  29. Scale-Based Support Credit for the Growth of SMEs In the case of80.000.-TL Credit interest/profit share cost paid by KOSGEB 6.900.-TL interest/profit share cost paid by medium-sized enterprise 2.300.-TL

  30. Credit Interest Rate Support for Export Promotion (22.11.2010 – 31.12.2011) Decision of ExecutiveCommittee of KOSGEB dated 19.10.2010 andnumbered 2010/11 forencouringing / promoting competition, employment & exportactivities of SMEs

  31. Credit Interest Rate Support for Export Promotion Max. Credit limit : 200.000.-USD Non-payment term (grace period) : 6 months, Credit pay-back : 6 months (at once) Prerequisite:to make an export commitment Interest Rate : ¼ for SMEs

  32. Credit Interest Rate Support for Export Promotion In the case of200.000.-USD Credit interest/profit share cost paid by KOSGEB’s 2.623.-USD interest/profit share cost paid by enterprise 875.-USD

  33. NATURAL DİSASTERS LOANSEmergency Support LoansFor VAN Provence (09.12.2011- 21.12.2012) emergency support loans to enterprise which working places damaged by natural disasters, civil commotions, general strikes, fires, floods, submersion etc. İnterest rate support to SMEs (registered and approvedin the database of KOSGEB) Max. Credit limit : 100.000TL/enterprise Credit pay-back : 24 months İnterest Rate : 0 %

  34. Zero Interest Rate Support for VAN Province (09.12.2011- 21.12.2012) Max. Credit limit : 30.000TL / SME Non-payment term : first 12 months Credit pay-back period : 24 months TOTAL : 36 months Interest Rate : 0% / SME

  35. Within the scope of Nınth Development Plan (2007-2013) • Based on theDecision #2010/41 of State Planning Organization (YPK) • As Erzurum is one of thecities of Center of Attractionwith a highpotentialtogrow. • KOSGEB put intoaction; a newinterest rate supportprogrammefor Erzurum SMEsrelatedwithTourismSector on 03.07.2012 Currentlyimplementingprogramme

  36. Within the scope of Nınth Development Plan (2007-2013) • Erzurum is the biggest city of the Eastern Anatolian Region and is also a very ancient settlement place. • As the city is established at the skirts of Palandöken Mountain, the city had gained great importance in the field of winter tourism during the recent years. • The city houses historically rich works of art and therefore the city is like a cultural center having the major potential for tourism.

  37. Zero Interest Rate Support for ERZURUM Tourism Sector (03.07.2012-15.06.2013) Max. Credit limit : 100.000TL / SME Non-paymentterm : first 6 months Credit pay-backperiod : 18 months Interest Rate : 0% for SME

  38. Credit Interest Rate Supports(2003-31.03.2013)

  39. Credit Interest Rate Supports(2003-31.03.2013)

  40. Credit Interest Rate Supports(2003-31.03.2013)

  41. NUMBER OF SMEs(2003-2012)

  42. Credit Volume (2003-2012)

  43. KOSGEB SME CREDIT SUPPORT PROGRAMS ThankYou www.kosgeb.gov.tr kobikredi@kosgeb.gov.tr

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