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The European Investment Fund and Kredi Garanti Fonu (KGF) have signed a EUR 45 million guarantee agreement under the Competitiveness and Innovation Framework Programme (CIP) helping to provide enhanced access to finance for Turkish businesses.

SMEs in Turkey could now have access to over EUR 100 million of loans guaranteed under the CIP which will help to support entrepreneurs' access to finance. This guarantee agreement is expected to target start-ups and young businesses across Turkey, allowing KGF to support the creation of several thousand jobs.

This agreement has led to the launch of a new initiative by KGF titled ‘One SME for every village' which aims at working with at least one business in each of the 3,000 villages targeted across Turkey, including those where access to finance is more challenging.

Jose Romano, Head of Turkey and iVCi at the EIF, said "I am delighted to be here today at this signature ceremony as this guarantee deal with KGF allows us to leverage EU resources for the benefit of Turkish SMEs."

He added: "By supporting KGF's ‘One SME for every village' programme we can target previously disadvantaged areas and contribute to job creation."

Guarantees will cover investment and working capital loans provided by different financial intermediaries. Loan projects supported by KGF under the CIP programme in Turkey will be expected among other objectives to improve local village environments, protect the architectural heritage and support tourism.

Commenting on the transaction, Hikmet Kurnaz, General Manager at KGF said: "As the only specialised SME guarantee institution in Turkey, KGF is pleased to renew its partnership with the European Investment Fund, following a successful partnership under the Multiannual Programme (MAP, CIP's predecessor)."

Background information:

The Competitiveness and Innovation Framework Programme (CIP), which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the European Investment Fund (EIF) has been allocated EUR 1.1bn to be split between venture capital - with the High Growth and Innovative SME Facility (GIF) - and guarantees - with the SME Guarantee Facility (SMEG).

Under the SMEG, financial institutions are encouraged to enhance access to finance for SMEs. The facility offers an excellent tool to allocate additional financing volumes for those SMEs that would not otherwise have access to resources and financial engineering instruments because of the increased lending risk entailed. As such, The SMEG complements and broadens EIF's own product offering.

The EU CIP SMEG Facility gives the EIF the opportunity to play an essential role in supporting sustainable job creation and entrepreneurship in European SMEs.

About KGF

Kredi Garanti Fonu is a Turkish guarantee institution whose mission is to support SMEs by providing a guarantee for their loans. KGF mediates between entrepreneurs with limited access to commercial finance and the banking system, thus supporting enhanced access to finance to businesses, whilst at the same sharing risk with banks on loans to SMEs and helping them to expand their client base in that segment.

About EIF

The EIF central mission is to support Europe's SMEs by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

For further information, please contact David Yormesor, d.yormesor@eif.org

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