BİRLİKTE. DAHA GÜÇLÜ.

Government Support and Grants
KOSGEB Support Programmes

KOSGEB AND ITS SERVICES

The Small and Medium Industry Development Organization (KOSGEB), which was established to support SMEs operating in the manufacturing industry, is a governmental institution affiliated to the Ministry of Industry and Trade of Turkish Republic. It was established in 1990 in order to increase the share and effectiveness of small and medium sized manufacturing industry, raise their competitiveness, and realize integration within industry in line with economic developments and national policies.

KOSGEB Supports under KOSGEB Support Regulation

Before 2003, SMEs which want to benefit from KOSGEB supports, could directly apply KOSGEB service providers and the requested support could be provided within the frame work of budged availability. After restructuring of KOSGEB organization and support mechanism, enterprises have been directed to strategic objectives depending on their capacity and competitiveness power after being registered in KOSGEB database. Additionally, enterprises identify the route to get to their destinations with Strategic Road Map (SRM) and type of support is determined according to objectives in the SRM.

Application steps of support mechanism can be summarized under four headings:

  1. Screening
  2. Strategic Road Map
  3. Support Implementation
  4. Monitoring

i) Screening

Firstly, SMEs have to be registered in the KOSGEB database. In order to be registered in the KOSGEB database, application is made to the nearest KOSGEB service unit with SME Declaration prepared by the SME. If SME Declaration is approved by KOSGEB, the SME can apply to KOSGEB service unit with Beneficiary Statement Form, which can be described as a fact-finding questionnaire. As another method, field surveys are also used as collective application.

At this stage, SME fills the online Beneficiary Statement Form containing fields concerning basic profile, requirements, and future oriented plans of itself, which shows where the SME is, where it wants to go, how it can reach there, how it can monitor and evaluate the achievements. In particularly, the headings existing in the Form are;

  • General Information about the SME
  • Systems and Processes
  • Externally Supplied Services
  • Performance of the SME
  • Future Requirements of the SME
  • Sectoral Clustering

As the second step, data coming from Beneficiary Statement Form flows to KOSGEB Database which is created on a smart software platform. Registered SMEs are classified into four groups (A, B, C, and D) according to their characteristics and then, they are notified about the result. According to their groups, SMEs have to prepare Strategic Road Map, which shows their present condition, plans, objectives and what type of supports they need, for a period of 3 years.

ii) Strategic Road Map (SRM)

Since SRM is a need-based and capability-focused enterprise management system by strategic planning, it is very important for the enterprises being able to determine their own requirements and goals clearly.

Strategic Road Map shows;

  • The starting point and where the enterprise wants to arrive
  • Enables enterprises to visualize their critical assets, the relationship between these and the skills, technologies, and competencies required to meet future market demands
  • Defines the objectives and actionable steps necessary to get to destinations
  • Helps to develop strategic goals, objectives and milestones
  • SMEs online prepare their own SRM. But if necessary, some training programmes regarding how to prepare SRM can be organized for voluntary SMEs by KOSGEB.

Enterprises that prepared their SRM are directed to specific objectives according to the group they belong to by the software depending on the data existing in SRM. Group A, B, and C enterprises can choose any of the specific objectives, on the other hand Group D enterprises are only directed to “General Enterprise Development” objective. Depending on the directed objective, type of the support is suggested by the software.

On the other hand, entrepreneurs, operating organizations, career organizations and sectoral organizations existing in the KOSGEB database can directly apply for Regional Development and Entrepreneurship Development Program without the need of SRM.

Consequently, all the decisions belong to the Evaluation Commission composed of KOSGEB experts. In fact, the suggestions made by the program should be considered as decision-support information for the Commission.

After mutual agreement is provided between KOSGEB and the SME in terms of the type of support, an agreement is signed, so support implementation starts.

iii) Support Implementation

After Strategic Road Map is approved by the Evaluation Commission, application about the support is done and the support process starts. Following the completion of the objectives and services purchased within the scope of the support agreement, all information and documentation constituting the basis of the payment and that have been specified in the agreement as well as the principles-fundamentals are delivered to the relevant KOSGEB unit. Each support has its own application, evaluation, approval and payment conditions. The relevant KOSGEB unit evaluates all of the delivered information and documentation within the framework of the provisions of the agreement. The support payments which have been found favourable are paid to the beneficiaries in return of a document such as invoice, receipt or supplier invoice indicating that the payment has been made to the supplier and bank statement.

Entrepreneurs, operating organizations, career organizations and sectoral organizations existing in the KOSGEB database, in relation to the supports requested, also have to obtain the documents and information published in the KOSGEB web page and submit them to the relevant KOSGEB unit, where it has been registered to the database.

iv) Monitoring

Beneficiary Objective Evaluation Report is prepared by KOSGEB at the end of 3 years which is the period of SRM validity or at any time when the SME declares the achievement of its objective specified in SRM, in order to monitor whether the SME has reached the specified objectives in SRM or not. In the Evaluation Report the issues declared by the SME are about the achieved improvements in areas such as organization, management, human resources, production processes, marketing and sale processes. As a result of this evaluation, KOSGEB decides whether to carry on the support implementation or to finalize.

SME Credit Support Mechanism

By Starting 2003, some amount of KOSGEB budget has been allocated to SMEs in low or zero interest rates by the intermediary banks. In other words, SME Credit Support System can be considered as an interest rate support on bank loans.

In order to minimize the impact of the current financial crisis on SMEs, Turkish government has taken some precautions. In this regard, KOSGEB has signed protocols with banks so as to provide financial credit at an agreed interest rate to eligible SMEs where eligibility rules are pre-determined by KOSGEB and the bank together. Hence the applying SME is analyzed in this respect by both KOSGEB and the bank. The interest cost of the credit is paid to bank by KOSGEB, where only the principal amount of the credit is paid back to the bank by the benefiting SME at a determined pay back period.

In order to benefit from any credit support programme, SMEs have to be registered in the KOSGEB database with Beneficiary Statement form and SME Declaration before the application as it is mentioned for the supports under KOSGEB Support Regulation. Availability of the application is evaluated by the relevant bank and KOSGEB service unit, and then the SME is notified about the result. After approval of the application, the SME can benefit from the programme.

KOSGEB offers a number of credit programs on various areas such as;

  • Export Promotion
  • New Employment
  • IT Infrastructures of SMEs
  • Moving the Leather Sector to Industrial Zones
  • Machinery and Equipment for Food Sector

Some examples of credit support programmes are briefly summarized below.

Credit Support Programme for Exporting Companies

In order to support exporting SMEs, KOSGEB provides credit for exporting SMEs with “zero” interest rate to promote their export capacity and increase their competition level. The total amount of credit volume is 650 million US Dollars and the interest cost of this credit is paid by KOSGEB. The upper limit of credit for each enterprise is 100.000 USD and SMEs registered in the KOSGEB database can benefit from this support scheme. The interest cost support is grant and repayment of only the principle part of the credit is made by the benefiting enterprise according to a determined plan by KOSGEB. The maturity of this credit support programme is 6 months and the total amount is paid in one single payment at the end of 6 months.

Credit Support Programme for Craftsman and Artisans

In order to overcome the liquidity problems in the domestic market and so as to meet the financial requirements of the manufacturing craftsman and artisans, a credit support programme with “zero” interest rate has been developed by KOSGEB. In this programme woman entrepreneurs have priority. The interest cost support is grant and repayment of only the principle part of the credit is made by the benefiting enterprise according to a determined plan by KOSGEB. The prerequisite of this programme is being a registered member of The Confederation of Turkish Tradesmen and Craftsmen (TESK). The maturity of this credit support programme is 18 months. There is no payment for the first 6 months and in the following period repayments is made in each 3 months in equal amounts.

Credit Support for SME Machinery Equipment and Investment

In order to increase the competitiveness and the created added value and so as to help SMEs to keep up with the international standards, KOSGEB provides credit interest support for medium to high technology level SMEs and medium to low technology level SMEs i.e. conventional SMEs.