What Happened to Credit Guarantee Fund Loans?
Finally, the administration provided a detailed account of how the CGF loans were used. What happened to credit guarantee fund loans?
Finally, the administration provided a detailed account of how the CGF loans were used.
Credit Guarantee Fund (CGF) Allocation and Risk Management General Manager Mehmet Aysal stated that as of the first week of September, CGF insurance reached 192.1 billion TL volume on total loans of 214.2 billion TL. He added that credit to 330,771 enterprises was provided. Aysal said “If we look at break-down of this volume, as of end of August, 55.8% of the support is for new loans, 30% is additional loans. Ratio of refinancing is only 4.5%, responding to wide-spread criticism in the press that recipients used the loans to defer bad debts.”
Aysal gave information about CGF at the meeting titled “SME Management Habits are Changing” organized by information services company Experian. “It is used to take approximately 2 months for a company to access a loan in CGF” said Aysal. Between 1993 and 2016 CGF provided loans to 25 thousand firms in total but now CGF provides loans to 25 thousand firms in a week.
Aysal stated that 99% of companies in Turkey are SMEs and the share of these companies in financing is around 40% while the share of employment is 60%.
According to the estimates of the agency, CGF’s effect on growth is about 2% and Aysal says that international credit rating agencies increased Turkey’s growth estimates based on CGF. Aysal underlined that the growth estimates for 2017 is 6-6.5%.
CGF BECAME THE LARGEST IN THE WORLD
Mehmet Aysal noted that they have removed credit approval committees; instituting instead an internal evaluation system (KOBİS) to do this job in line with objective criteria.
Aysal pointed out that they started to implement a new project called the Portfolio Guarantee System, which shortened closing time for loan applications from 35-40 days to 1 day.”
As a result of these efforts, CGF became able to evaluate the same number of applications that have been evaluated in 25 years, in only 1 week.
CGF became the biggest supporter of not only SMEs but all enterprises to reach financing in Turkey. CGF thus now connects the Turkish economy, meets real sector and banking demands on a common ground.
“CGF is not a cyclical tool; it is a permanent structural reform serving the economy with different products. It has been giving loans both from its own resources and foreign resources for 25 years and it will be doing so. CGF surpassed South Korea’s Korea Credit Guarantee Fund (KODIT) which was the largest of the world. As of last Monday, CGF reached 192.1 billion TL volume with credit extended to 330,771 enterprises. Aysal said “If we look at breakdowns of this volume, as of end of August, 55.8% of the support is new loan, 30% is additional loan. Ratio of refinancing is only 4.5%. The average interest rate is 15.12% while the average maturity is 36.9 months. 86.6% of the loans are in TL, 8.8% euro and 4.6% US dollars. Loans given to trade and services sectors constitute 44.1% of our total support and manufacturing industry has a 30.3% share in total loans. Finally, SMEs constitute 74.7% of total firms that receive financing.”