Credit Guarantee Fund


Information Center


When was KGF founded? What does it do and what is the purpose of its foundation?

KGF was founded by Cabinet Decree numbered 93/4496 and dated July 14, 1993. It started its activities by granting its first guarantee in 1994.

As a guarantee institution, KGF provides access to finance for those Small and Medium Sized Enterprises (SMEs) that can’t benefit from bank loans due to insufficient collateral, by assisting them as a “joint guarantor“.

As noted in the relevant Cabinet Decree, KGF was founded to ease access to finance for small and medium sized enterprises, farmers, merchants, craftsmen and self-employed entities in need of collateral in terms of credit worthiness, and in accordance with this purpose it was exempted from taxes and dues.

What is a SME?

These are enterprises described in various provisions of the “Regulations on Definition, Qualifications and Classification of Small and Medium Sized Enterprises” with the Cabinet Decree numbered 2012/3834 and dated 10.09.2012.

In general, SMEs are enterprises that employ less than 250 people annually and whose either sales revenue or financial balance sheet does not exceed TRY 40 million.

Is KGF a public institution?

KGF is a joint-stock company founded in accordance with Turkish Commercial Code. Its shareholder include public entities and entities considered to be public such as KOSGEB (Small and Medium Industry Development Organization), TOBB (Union of Chambers and Commodity Exchanges of Turkey), TESK (Confederation of Turkish Tradesmen and Craftsmen), Halkbank, Ziraat Bankası, Vakıfbank, Eximbank and Ziraat Participation Bank Remaining shareholders are Akbank, Albaraka Türk Participation Bank, Alternatifbank, Asya Participation Bank, Denizbank, Burgan Bank, Finansbank, HSBC, ING Bank, Kuveyt Türk Participation Bank, Şekerbank, Türk Ekonomi Bankası, Garanti Bankası, İş Bankası, Türkiye Finans Participation Bank, Yapı ve Kredi Bankası and MEKSA (Foundation for the Promotion of Vocational Training and Small Industry) and TOSYÖV (Turkish Small and Medium Enterprises, Self-Employed People and Executive Foundation).

Does KGF extend loans?

KGF is a guarantee institution. Extending loans is not included in its scope of activities. However it does make it easier for SMEs to acquire loans by granting guarantees in favor of SMEs.

Which loans does KGF provide guarantees for?

Guarantees are granted for any cash and non-cash loans that enterprises need for operation and investment financing, excluding personal loans, consumer loans, checkbook loans and corporate credit cards.

Is there any state support provided to KGF?

Universally, since services provided by guarantee institutions are for the public good, they have always been institutions supported by the state. In this regard, KGF is excepted and exempted from stamp taxes, corporate taxes and certain fees. Besides, presence of public entities in its shareholding structure should be considered part of the state provided to KGF. In addition, fund of TRY 2 billion provided to KGF by the Secretariat of Treasury with the Cabinet Decree numbered 2009/15197 in order to fend off the negative effects the global economic crisis and instability is another significant state support. The said fund was raised up to TRY 2 billion with the “Regulations on Amendment to the Certain Laws and Legislative Decrees” numbered 6637 and dated 27.03.2015.

What is the standard operation in KGF guarantee scheme?

It does not have standard guarantee scheme. KGF has – along with the guarantee schemes financed by its equity capital – guarantee schemes dependant on the funds provided by other institutions and organizations such as the Secretariat of Treasury, Baku-Tbilisi-Ceyhan Pipeline Project Co. (BTC Co.) and EIF (European Investment Fund).

For example, in guarantee extensions dependant on Secretariat of Treasury support, KGF bases its evaluation on the credit worthiness rating done by the bank itself and does not conduct further evaluation of the subject SME within KGF. KGF makes its final decision by considering bank requests in terms of credit worthiness. In contrast, in guarantee extension dependant on equity capital, KGF evaluates credit worthiness of SMEs through its own specialists in addition to the banks’.

In Portfolio Guarantee System (PGS), on the other hand, KGF does not partake in the decision making process. Banks have complete loan extension autonomy with KGF guarantee in this regard. For guarantees granted through EIF and BTC support, relevant protocols made with the corresponding institution and organization are taken as a basis.

Besides, risk share rates and guarantee limits may vary depending on the support types.

Are there any other institutions like KGF in Turkey?

KGF, making use of the examples of guarantee institutions operating in Europe, is the only institution in Turkey that provides guarantees to SMEs in order to ease their access to finance.

Who can benefit from KGF guarantees?

Real and legal entities defined as SMEs which have credit worthiness before the banks but experience difficulties to access to finance due to insufficient collateral, may benefit.

Can merchants, craftsmen and self-employed persons and farmers benefit from KGF guarantee?

Merchants, craftsmen, self-employed persons and farmers can benefit from KGF guarantee since they are considered SMEs.

Does KGF grant guarantees to cooperatives?

KGF provides guarantees – excluding construction, plot and building cooperatives – to associations and cooperatives belonging to associations.

Does KGF guarantee the whole loan?

KGF guarantees through banks are partial since KGF works with banks based on a risk sharing principle. In schemes involving TÜBİTAK, KOSGEB, TTGV and Eximbank, however, KGF grants complete guarantees.

For public support programs to SMEs by institutions like TÜBİTAK, KOSGEB and TTGV and loans extended directly by Eximbank, KGF provides complete guarantees over the support/loan amount, on condition that it does not exceed the guarantee limits. In contrast to that, KGF works with banks on a risk sharing principle and guarantees only a certain percentage of the loan. Since KGF depends on the bank’s initial evaluation of the credit worthiness of the SME, it predicates the bank to share some of the risk for the loan extended.

Is there an upper limit on KGF guarantee amounts?

KGF guarantee limits vary depending on the type of support.

  • In terms of guarantees provided from equities of KGF, the guarantee upper limit per SME is TRY 1 million. However, in guarantees to be provided exclusively or additionally for Eximbank export loans, the maximum guarantee limit per SME may increase up to TRY 2 million.
  • In letters of guarantee to be issued addressing institutions such as TÜBİTAK, KOSGEB and TTGV, the upper limit is restricted with the guarantee limit to be provided per SME from KGF equities.
  • In guarantees provided within the scope of fund granted from the Secretariat of Treasury, the maximum guarantee limit per SME is TRY 1.5 million.

Can a business owner owning multiple firms benefit from KGF guarantees for each of his/her firms individually?

According to the banking law, firms belonging to the same risk group can benefit from guarantees provided that they applied for guarantees individually. However, there is a limit on how much firms belonging to the same risk group can benefit from KGF guarantee. As follows:


  • In guarantees provided from equities of KGF, total guarantee limit for a risk group is TRY 1.5 million. However, in guarantees to be provided exclusively or additionally for Eximbank export loans, the total guarantee limit per a risk group may increase up to TRY 2.5 million.
  • In letters of guarantee to be issued addressing institutions such as TÜBİTAK, KOSGEB and TTGV, the total upper limit is restricted with the guarantee limit to be provided per a risk group from KGF equities.
  • In guarantees provided within the scope of fund granted from the Secretariat of Treasury, the total guarantee limit per a risk group is TRY 2 million.

Can a SME benefit both from KGF equity and Treasury support?

Dependant on its credit worthiness, a SME can benefit from KGF equity guarantees and Treasury supported guarantees within the limits set.

Is there a maturity deadline for loans guaranteed by KGF? Does KGF grant indefinite guarantees?

KGF sets guarantee maturity according to loan maturity. There are also arrangements which guarantee maturity is indefinite; and such arrangements are pursuant to the time indicated on letter of guarantee loans, tender specifications and certain contracts with the management. However, in treasury supported funds, there are guarantee for maturity loans with at least 6 months and at most 8 years.

Is there a deadline on when the guarantee granted by KGF can be used?

Guarantee granted by KGF must be used within 6 months for Treasury supported guarantees and within 1 year for equity supported guarantees, on condition that the firm preserved its credit worthiness during this time.

Is there a lower limit for guarantee applications to KGF?

There is no lower limit in KGF guarantees.

Given the sum of guarantees does not exceed the guarantee limit; can SMEs apply for different guarantee amounts at different times?

A SME has the option to use the guarantee granted to it all at once or part by part within the guarantee usage period. Besides, a SME can demand the top guarantee limit part by part in time as needed or all at once right away.

Can new loan capacity be created with repayments of existing loans taken with KGF guarantee?

The SME can benefit from new KGF guarantee – based on the amount of repayments made for the earlier loan – by filling an application for the new guarantee. In revolving loans used from as “Bank Overdraft”, re-extension is possible without KGF’s confirmation, on condition that the process is within the limits of KGF guarantee.

Can the SME apply for new guarantees from the same (or another) bank before the loans extended through KGF guarantee resolve?

Within the general limits set, a beneficiary can apply to KGF through multiple banks simultaneously or in different time frames.

Which banks does KGF provide guarantees for the loans?

The banks which signed a guarantee protocol with KGF are as follows: Halkbank, Ziraat Bankası, Vakıfbank, Eximbank, Ziraat Participation Bank, Akbank, Albaraka Türk Participation Bank, Alternatifbank, Asya Participation Bank, Denizbank, Burgan Bank, Finansbank, HSBC, ING Bank, Kuveyt Türk Participation Bank, Şekerbank, Türk Ekonomi Bankası, Garanti Bankası, İş Bankası, Türkiye Finans Participation Bank, Yapı ve Kredi Bankası.

Are there any institutions/organizations other than banks that KGF provides guarantee for?

We have a protocol signed with KOSGEB (Small and Medium Industry Enterprises Development Organization) TTGV, (Technology Development Foundation of Turkey), TÜBİTAK (The Scientific and Technological Research Council of Turkey) and various financial leasing companies. for detailed information

Does KGF discriminate amongst banks?

KGF signs the same contract with all the banks. So, there is no discrimination in terms of guarantee policies when it comes to banks. (Eximbank is excluded from this consideration.)

How does KGF handle and evaluate guarantee applications?

Guarantee applications are evaluated by Treasury Supported and Equity Funded Guarantees Committees, composing of competent representative from KGF partners that specialize in credit worthiness and loan extension.

How do you apply to KGF? Is there a difference between applications for equity funded and Treasury supported guarantee?

SMEs that would like to benefit from KGF guarantee for loans they are looking to receive from banks can apply for a guarantee through one of the banks that signed a protocol with KGF. The same procedure also applies for Financial Leasing Companies that signed a protocol with KGF.

For guarantee schemes funded by Treasury support, it is possible to the banks having partnership rate only in KGF.

Can SMEs apply directly to KGF rather than through banks?

SMEs can apply directly to KGF General Directorate or 38 KGF Branches in 33 provinces, for the guarantee requests for TTGV, TÜBİTAK; KOSGEB and Eximbank support and loans.

Which provinces are host to KGF branches? Where do you apply in provinces without a KGF branch?

KGF has total 38 branches in 33 provinces. For branch list and their respective province, Please click

One should not forget that branches of banks that signed a protocol with KGF are open to question and requests of SMEs like any other KGF branch.

SMEs wishing to benefit from KOSGEB supports can apply through provincial directorates as well as the relevant KGF branches.

Which documents does KGF require during application?

KGF does not request any documents other than the ones that banks require for a loan application. In case there are missing documents in the loan file sent to KGF by banks, KGF will only request the missing documents.

Can a recently founded firm apply for KGF guarantee?

One of the KGF’s main goals is to enhance entrepreneurship and fulfill the finance needs of new firms that banks are unwilling to extend loans to.

How long does it take KGF to decide on an application?

KGF’s evaluation of applications depends on size of the request and finance structure of the firm in question and ranges up to 15 days.

The recently implemented PGS (Portfolio Guarantee System) applications take less than one day to conclude.

Does KGF charge beneficiary firms any fees?

A trivial evaluation fee is charged for applications. An annual commission fee, ranging between 0.3-2% of the guaranteed risk amount, is charged depending on the nature and type of loan extended.

1. Does KGF only support projects? Does it guarantee operating capital loans?

KGF grants cash or non-cash guarantees for both investment and operating capital loans.

Can SMEs that owe taxes and SGK (Social Security Institution) premiums apply for KGF guarantees?

Different policies are implemented in terms of outstanding taxes and SGK premium when evaluating credit worthiness for guarantee. In Treasury support guarantees, it is required that it does not have overdue taxes and SGK premiums. However, on guarantees supported by equities, they do not cause an automatic dismissal of applications since overdue taxes and SGK premiums are evaluated in terms of their significance in the overall balance sheet.

Can SMEs that had bounced checks before benefit from KGF guarantee?

Such SMEs can apply for KGF guarantee if they do not have any outstanding debts subject legal action. Furthermore, the SME needs to prove – with documentation – that is paid any bounced checks and notes payable it could not pay before.

Does KGF - like banks - ask for collateral for the guarantees it provides?

KGF, in line with its mission, provides guarantees to SMEs that are credit worthy but lacking in sufficient collateral. However, in case it is reached a conclusion that the SME bears unforeseen risk, KGF might request collateral in the form of movables and immovables that the banks do not consider to be collateral. KGF seeks to easy access to finance for SMEs with the provision of collateral variety for he SME by asking for hypothecs on enterprises, machinery, vehicles, brands, mining licenses, lands not subject to zoning, farmlands, OSB (Organized Industrial Area) lands without deed and cooperative shares, receivables, animals (cattle, sheep etc.), insurance policies and receivable policies.

What happens when the SME cannot pay back the loan extended through KGF guarantee?

In case SME cannot pay back the loan, the bank requests compensation from KGF for loan extended through guarantee. KGF fulfills its responsibility on the guarantee by paying the bank for the amount it guaranteed. After which bank and KGF take legal actions against the SME and its co-signers. KGF collects the debt owed to it through legal proceedings.

Can SMEs that had their guarantee applications unconfirmed before apply for guarantees again?

For such SMEs to be available for reevaluation, 6 months need to pass since their earlier application in order to provide them the time to better their situation.