Credit Guarantee Fund

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Credit Guarantee Fund Operation and Research Inc. was established in 1991 to provide guarantees for loans taken out by SMEs from Banks through guarantees/sureties.

In the establishment of KGF, TOBB (Association of Turkish Chambers of Commerce, Industry, Maritime Trade and Commodity Exchanges), TESK (Confederation of Turkish Tradesmen and Craftsmen), TOSYÖV (Turkish Medium-Sized Enterprises, Self-Employed Persons and Managers Foundation) and MEKSA (Vocational Education and Small Business Administration) Industry Support Foundation) as a founding partner, then KOSGEB (Small and Medium Industry Development and Support Administration) and Türkiye Halk Bankası A.Ş. have also joined this partnership.

 

THE FOUNDATION PURPOSE OF KGF:

KGF supports small and medium-sized enterprises with the guarantee it provides, and makes it possible to use bank loans to finance their investments and businesses. Indeed, access to bank loans, especially for new and small enterprises, requires a very strong guarantee. On the other hand, the high collateral demanded by the bank emerges as an important obstacle in the long-term loan use of SMEs. Apart from this, the bank’s requirement for additional collateral when increasing the existing credit limits of SMEs while they expand their businesses is often an issue that must be resolved between the business and the bank.

With its guarantee to SMEs and the associated risk, KGF allows these businesses to access more bank loans. This enables our small businesses to benefit from long-term and cost-effective loans. In this manner, entrepreneurship is promoted and a supplementary credit facility is established in aid of SMEs, thus contributing to economic growth and development. The main purpose of KGF guarantees is to develop youth and women entrepreneurship. Realising innovative investments, small businesses with advanced technology, supporting exports, investments that will increase employment, and investments for regional development are the priority issues in KGF guarantees.

 

WHO CAN BENEFIT?

KGF, which supports the growth and development of innovative youth and creative entrepreneurs and small and medium-sized enterprises, removes the barrier of lack of collateral in front of good business ideas.

This collateral problem of small enterprises, which cannot access bank credit facilities as easily as large enterprises, is resolved by KGF guarantee, thus SMEs are also able to use bank loans. Enterprises with less than 250 employees are considered as SMEs, and the demands of entrepreneurs in the services and mining sectors as well as the manufacturing industry are met. SMEs from all regions of Türkiye, tradesmen and craftsmen, agricultural enterprises and farmers, women and young entrepreneurs  can apply for KGF guarantee.

 

WHICH TYPES OF CREDITS CAN BE GUARANTEED?

Guarantees are provided for all kinds of credits for business needs, and there is no limitation on the type of credit. This can be a long-term investment credit, a cash credit in the form of a debtor current account, or a non-cash credit such as letters of credit and letters of guarantee.

  • Starting a New Business
  • Expansion of Existing Facility
  • Raw Material Supply
  • Use of New Technology
  • Moving to New Workplace
  • Eliminating Cash Shortage
  • Export Financing
  • Import Financing
  • Credirs for Letter of Guarantee Purposes
  • Financial Leasing
  • Other cash and non-cash credits utilised by SMEs

In its assessment, the Credit Guarantee Fund prioritises the project’s feasibility, adequacy of management, merit of the firm and its partners, morality, equity contribution, and credit repayment. Collateral is seen as the last element in this evaluation and when deemed necessary, the types of collateral that banks do not accept because they do not comply with their principles are accepted by KGF. KGF does not provide guarantee for the credits to be used for the repayment of old debts and credits.

 

HOW TO APPLY?

In order to benefit from KGF guarantee; it is sufficient to inform your bank that you want to benefit from KGF guarantee and to consent to sending your file to KGF. If your loan application is approved by the bank, your guarantee request submitted to KGF is finalised within approximately 2 weeks. In the KGF application, bank branches mediate the application to KGF free of charge and provide information about this application. KGF does not request any additional documents from the company other than the documents given to the bank. However, if there are documents and information that need to be brought up to date, they should be submitted to KGF.

KGF experts conduct an interview with the company – if possible at the company’s workplace – regarding the guarantee request and prepare an inspection report on the current situation and project of the company. The guarantee requests are ultimately reviewed and determined by the Approval Commission, comprising the representatives of the partners, based on the recommendations of KGF General Directorate. In principle, the Approval Committee meets once every fifteen days. The decision is notified to the requesting company and the bank as soon as possible. A guarantee commitment letter is obtained from the companies that are decided to be given guarantee and signed by the company and guarantors. In addition, if there are other conditions specified in the decision, a Loan Repayment Guarantee is issued and sent to the bank following the fulfillment of these conditions. This process takes approximately two weeks. However, in urgent cases, requests can be answered within a week.

WHAT IS THE COST OF THE GUARANTEE?

In order for the companies requesting guarantee to be evaluated, a fixed examination fee is charged. In case the request is approved and the loan is utilised with the guarantee of KGF, a commission of 1% to 2% per annum, depending on the cash, non-cash or other characteristics of the guarantee, is charged on the guarantee balance in advance every year during the loan term.

 

HOW MUCH IS THE GUARANTEE LIMIT?

The upper limit of guarantee for an SME is 750.000 YTL, and the upper limit of guarantee for enterprises that this SME directly or indirectly constitutes a risk group is 1.000.000 YTL.

 

WHAT ARE THE EVALUATION CRITERIA?

  • The first condition to benefit from KGF guarantee is that the applicant;
  • SMEs, tradesmen and craftsmen, agricultural enterprises, farmers; women and young entrepreneurs,
  • The project for which KGF guarantee will be used must be “profitable”, “realisable” and “feasible”,
  • The management staff who will carry out the project should have project skills and professional experience,
  • The project should increase and maintain employment,
  • The project must have “acceptable” risks,
  • The project should be environmentally sensitive and respectful.

HOW MUCH OF THE RISK DOES KGF TAKE?

The Credit Guarantee Fund, which operates according to the principle of risk sharing, provides guarantees up to 80 per cent of the credit.

KGF COOPERATES WITH THE FOLLOWING BANKS AND FINANCIAL INSTITUTIONS

  • Akbank T.A.Ş.
  • Ak Finansal Kiralama A.Ş.
  • Albaraka Türk Katılım Bankası
  • Asya Katılım Bankası A.Ş.
  • Alternatifbank A.Ş.
  • Denizbank
  • Finans Finansal Kiralama A.Ş.
  • Finansbank A.Ş.
  • Fortis Bank
  • Garanti Finansal Kiralama A.Ş.
  • Halk Leasing Finansal Kiralama A.Ş.
  • HSBC Bank A.Ş.
  • İş Finansal Kiralama A.Ş.
  • Nurol Yatırım Bankası Anonim Şirketi
  • Şekerbank T.A.Ş.
  • T.C. Ziraat Bankası A.Ş.
  • Tekstil Bankası A.Ş.
  • Türk Eximbank-Türkiye İhracat Kredi Bankası A.Ş.
  • Türk Ekonomi Bankası
  • Türkiye Finans Katılım Bankası
  • Türkiye Garanti Bankası A.Ş.
  • Türkiye Halk Bankası A.Ş.
  • Türkiye İş Bankası A.Ş.
  • Türkiye Kalkınma Bankası
  • Vakıfbank

FOR DETAILED INFORMATION REGARDING THE CREDIT GUARANTEE FUND: http://www.kgf.com.tr