New SME definition blocked KGF loans, investments suspended

Merve YİĞİTCAN

The new SME criteria introduced to increase the number of companies included in the SME category resulted in a bottleneck in KGF loans. Due to the retroactive application of the latest KGF criteria, KGF-guaranteed loans for which enterprises classified as SMEs from non-SME status were approved for import substitution and high-tech investments were cancelled. The industrialists, who maintain that the application of the SME criteria to past years is an error of interpretation by the KGF, specify that the confusion must be cleared up, otherwise it will not be possible to make investments with guarantee limits weak.

The new criterion is also applied to previous years.

With the presidential decision number 5315 published in the Official Journal of March 18, 2022 and numbered 31782, the criteria used in the determination of SMEs have been updated in order to allow more companies to benefit from aid for SMEs. The net turnover or balance sheet limit, which is one of the necessary criteria to be an SME, has been increased from TL 125 million to TL 250 million. However, this change has started to block the way for large investments with the interpretation of the SME definition by the Credit Guarantee Fund (KGF). According to Article 6 of the SME Regulation, it is stated that the criteria existing at the accounts closing dates must be taken into account to determine the SME qualification, while the new criteria introduced with the amendment of 18.03.2022 are also applied retrospectively. by the KGF. In this case, KGF considers a non-SME company if its turnover in 2021 is greater than TL 250 million, if its turnover in 2020 is between TL 125 million and TL 250 million, on the grounds that ‘She broke the rule of being non-SME for two consecutive years and it was approved. It lowers the bond ceiling by canceling non-SME loans.

Guarantee of 35 million TL instead of 250 million TL

KGF’s interpretation problem leads to difficulties in loans from the manufacturing-based import substitution support program guaranteed by KGF, which was created to reduce the current account deficit and support domestic value-added production. In the said package, the upper limit of the KGF guarantee was set at TL 35 million for SMEs and TL 250 million for non-SMEs. As part of the support system, “non-SME” investments, whose loan files have been submitted to KGF and whose work has begun, are rejected by KGF after the company is classified as an SME with the new regulations, and it is requested to submit a new application in accordance with the new limit of 35 million TL. According to the manufacturers, the request for an investment of 250 million TL to be made with a limit of 35 million puts a stop to investments.

Eroğlu: It is not possible to understand KGF’s interpretation

Making assessments to WORLD on the subject, TOBB Plastics, Rubber and Composites Industry Assembly Chairman Yavuz Eroğlu said, “As the country is going through a period when we need to invest in products technology with added value, reducing the current account deficit, we will benefit from support for SMEs from the Presidency of the KGF. It is not possible to understand that he is blocking the path of companies that will benefit from the ‘Import Substitution Support Package Based on Manufacturing’ by misinterpreting this regulation made with the aim of increasing the number of companies. Stating that the KGF should assess the issues with a perspective that will pave the way for investments in line with the essence of the regulations, instead of a logic of bureaucratic limitation, Eroğlu said: “What needs to be done, c is the application of the modification of the regulation of 18.03.2022 to the evaluation of the SME qualification of 2021. For 2020 and previous years, the criteria of each year must be considered separately and its SME or non-SME qualification must be determined accordingly. As the regulations make clear, it is against the regulations to apply the amended criteria of 18.03.2022 to all years, although the criteria of the closing date of accounts should be taken as a basis. Moreover, we see that the legislator violates the principle of application of favorable regulations. Expressing that the Ministry of Treasury and Finance is working to correct the problem, Eroğlu concluded his remarks by saying, “But in the global economic situation which is changing every minute, this only serves to stifle the appetite for l ‘investment”.

2,000 companies entered the SME class

The “Regulations Amending the Regulation on the Definition, Qualifications and Classification of Small and Medium Enterprises (SMEs)”, prepared under the Presidential Decree, was published in the Official Gazette on March 18 and entered into force. According to the regulation, in which the criteria used to identify SMEs are updated, enterprises that employ less than 250 people and whose annual net turnover or balance sheet does not exceed TL 250 million are defined as SME. In the previous regulation, the upper limit to enter the SME category was 125 million lira. According to SME statistics released by TURKSTAT in 2021, there were 3 million 427,000,891 enterprises in Turkey. The number of SMEs, which was 3 million 419 thousand 773, will increase to 3 million 421 thousand 817 with the regulation.

The ministry tries to solve the problems

Manufacturers, who have been asked to reapply with the new guarantee cap, put investment on hold, saying it would be difficult to make high-cost investments, especially in the area of ​​import substitution and high technology, with a guarantee of 35 million TL. It has been learned that the Ministry of Treasury and Finance has started working to eliminate the problems caused by the interpretation by SMEs of the Credit Guarantee Fund.

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