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Government unveils TL 2.5 billion stimulus package for small companies
Minister of Industry and Trade Nihat Ergün announced the details of the new package at a press conference in Ankara on Friday.
Ergün noted that the package was prepared to conform to the budget of the Small and Medium Industry Development Organization (KOSGEB), which was finalized in the latest Middle Term Economic Program. “Therefore, this stimulus plan will not place any extra burden on the 2009 budget,” the minister underlined, adding that interested SMEs will only be able to apply for these new loans through the end of 2009.
Disclosing further details of the content of the package, Ergün said the first prong of the package aims to extend a total of TL 2.5 billion to an estimated 100,000 SMEs. “With this program, we aim to provide a new type of working capital for SMEs,” he noted.
KOSGEB will underwrite 75 percent of the interest on the loans, which will have a one year payback term, due in monthly installments and featuring a three-month grace period.
Companies can apply for those loans to support expanding operations, new investments, raw materials purchases, marketing, training, export financing, venturing into foreign markets and specific projects for business development.
The minister said if a company exploits the loan, using it for a purpose other than the stated objectives, it must pay the interest in full, without KOSGEB's support.
The second support program targets SMEs operating in the geographical basin of the Southeastern Anatolia Project (GAP), which includes nine provinces. This measure is already explained in the government's latest GAP Action Plan, the minister recalled. Companies in these nine provinces will enjoy easier methods of obtaining financial resources for machinery and equipment purchases. The upper limit of these loans will be TL 300,000. It will have a six-month initial grace period followed by a 30-month repayment period. Similarly, KOSGEB will pay 75 percent of the interest on these loans.
The provinces in the GAP region are Adıyaman, Batman, Diyarbakır, Gaziantep, Kilis, Mardin, Siirt, Şanlıurfa and Şırnak. The total amount of loans to be distributed to companies in these provinces is estimated to be TL 85 million, Ergün noted.
The third aspect of the stimulus package is an urgent support loan specifically aimed at those companies that sustained large amounts of damage from floods across Turkey during 2009. Many companies suffered huge losses as floodwaters inundated their production plants and warehouses.
The conditions for this type of loan include a six-month grace period and a 24-month term of repayment. KOSGEB will fully meet the interest payments of these loans, which will have an upper limit of TL 100,000. However, he avoided speculating how many lira in loans would be handed out to companies in flooded regions. "We just can't guess how many companies will knock on our door for this type of loan," he asserted.
The minister also pointed out that the Loan Insurance Fund will always be a valid option for any small company lacking collateral for loans it applies for. The application conditions and the banks that will be authorized to accept applications will be determined and publicized in the days ahead, the minister added.
Answering a question on whether there were problems collecting payments from previous loans the government had offered to reinvigorate the domestic markets, Ergün said nearly 99 percent of companies have paid the installments on time, without problem.
Only companies that are currently registered in KOSGEB's database will be able to benefit from the loans. In addition, a company with outstanding back taxes will still have the right to receive loans from the package.
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