Lifeline for SMEs: What is KOSGEB Credit and Grant Support? Who Can Benefit?

Many aspiring entrepreneurs who want to be their boss often require financial support during their companies' establishment or development stages. KOSGEB support is crucial, providing substantial resources for newly established companies to stand independently.

What is KOSGEB?

KOSGEB, the abbreviation for Small and Medium Enterprises Development and Support Administration of Turkey, was established to support SMEs and entrepreneurs in Turkey. It operates under the Ministry of Industry and Technology.The institution aims to serve various purposes, including adapting small and medium-sized enterprises (SMEs) to new technologies, strengthening employment, increasing the rate of domestic production, and enabling SMEs to contribute to exports. It provides grant and credit support to small businesses in line with these goals.

What Areas Does KOSGEB Support SMEs In?

KOSGEB provides support in various areas to enhance SMEs' competitiveness, sustainability, and innovation. These areas include:

1. Financing: KOSGEB offers grants or credit support tailored to the needs of entrepreneurs, providing financial relief to companies in difficult situations and easing cash flow issues.
2. Training: Many companies must provide employees with training related to their business sector. KOSGEB supports companies with training expenses, alleviating the financial burden.
3. Consultancy: Some industries require technical guidance and consultancy services. In such cases, companies can seek support from KOSGEB for guidance and consultancy expenses.
4. Technology Transfer: In production-oriented sectors, acquiring new-generation technologies and machinery to increase efficiency is necessary. KOSGEB provides specific support for SMEs in purchasing such machinery and equipment.
5. Promotion and Marketing: Every company must engage in promotional and marketing activities to reach its target audience. Support from KOSGEB for promotional expenses, which may include participating in fairs and advertising, can play a crucial role in managing significant costs.

What are the Grant and Credit Support Programs of KOSGEB?

KOSGEB grant and credit support vary according to sectors and business size. Additionally, businesses must meet specific requirements to benefit from these supports. KOSGEB has facilitated the application process for each company to apply for programs tailored to its field by creating support programs.

• KOSGEB support programs are as follows:
• Post-Earthquake Business Revitalization Support Program
• Green Industry Support Program
• Entrepreneurship Supports
• R&D, Technological Production, and Localization Supports
• Business Development, Growth, and Internationalization Supports
• SME Financing Supports
• TEKMER Support Program
• Guidance and Consultancy Services
• Rapid Support Program for Micro and Small Enterprises

KOSGEB Post-Earthquake Business Revitalization Support Program

This is a support program prepared by KOSGEB to help businesses affected by the February 6 earthquake, which significantly impacted 11 provinces, especially Hatay and Kahramanmaraş, to regain their former functionality. The upper limits of the support provided vary between 200,000 and 750,000 TL. Within the program's scope, support amounts are determined based on the province where the business is located, the size of the company, and the extent of damage to the workplaces. Even if the workplace is undamaged, support can be obtained, but as the damage and the size of the business increase, the upper limit of support amount also increases.Businesses in disaster areas can benefit from repayable loan support by applying to this support program, provided they meet the necessary conditions.

KOSGEB Green Industry Support Program

The Green Industry Support Program aims to increase the use of green energy, especially in industrial facilities and encourages production to be carried out with clean energy sources. It is conducted in collaboration with the World Bank. Within this framework, the supports provided are divided into two categories.

Support for SMEs' Solar Energy InvestmentsIt refers to financial assistance for the necessary machinery and equipment expenses to transition to green energy. The support rate is 60%, with an upper limit of 14,000,000 TL.

Clean and Circular Economy in IndustryIt denotes support for personnel, software, and service acquisition expenses required for the widespread use of green energy. The support rate is 70%, with an upper limit of 4,000,000 TL.For businesses affected by the February 6 earthquake, the support rates mentioned above can be increased up to 90%, depending on the province where the company is located, the extent of damage, and the business size.

KOSGEB Entrepreneurship Support Programs

One of the most sought-after and applied programs of KOSGEB is the Entrepreneurship Support Program. The aim of this program is to increase the survival rate of new businesses. The supports provided under the program are divided into two main groups:

Traditional Entrepreneur Support ProgramIt is a program that all newly established businesses can apply for. Establishment, performance, and certification support are provided within the program. The total upper limit is determined as 65,000 TL. The program consists of three different support elements.

1. With Establishment Support, non-repayable financing of 5,000 TL for sole proprietorships and 10,000 TL for capital companies is provided for the company establishment process.
2. Under Performance Support, non-repayable support of up to 40,000 TL is provided based on the criteria determined in the implementation principles of the program. Additionally, an additional 10,000 TL is provided if the entrepreneur is young, female, disabled, a veteran, or a martyr's relative.
3. Certificate Support is provided for expenses such as obtaining certificates and similar competency documents related to the field in which the company's employees will operate and providing training for the personnel. Unrequited support of 5,000 TL is provided.

To benefit from the Traditional Entrepreneur Support Program, it is mandatory to take the Traditional Entrepreneur Training provided by KOSGEB. Additionally, it should be noted that this training must be taken before the company's establishment to apply for the support program. Even if the training is taken after the company's establishment, it will not be possible to benefit from this support program.

Advanced Entrepreneur Support ProgramThis program has been created to support businesses that want to operate in strategic areas determined by the ministry. Within the program, resources of up to 375,000 TL can be provided. Although the establishment, performance, and certification support items are the same as the Traditional Entrepreneur Support Program, two new items are added:

1. Machine, Equipment, and Software Support provides support of up to 75% for the devices and software needed by businesses to operate. If these products are domestically manufactured, the support rate can increase to 90%. Resources of up to 300,000 TL are provided, considering the technology level at which the business will operate.
2. Mentorship Consultancy and Business Coaching Support offer support of up to 10,000 TL for expenses related to the areas mentioned in the program name.

Entrepreneurship TrainingOne of the benefits included in KOSGEB Entrepreneurship Support is KOSGEB Entrepreneurship Training. The aim here is to transfer entrepreneurship basics to individuals before incorporation and to create a conscious entrepreneur ecosystem. To benefit from KOSGEB Entrepreneurship Support, it is necessary to complete this training and obtain the certificate before establishing the company.

R&D, Technological Production, and Localization Supports

Under these supports, the aim is to open up the ways for SMEs in areas such as innovation and technological product investment. Various support programs are offered for businesses that want to grow and make technological investments.

R&D, Product Development, and Innovation Support ProgramKOSGEB provides special support for projects that businesses want to implement, which require significant technological investments. To benefit from these supports:

1. Research and development projects aiming to produce products based on new ideas and inventions should be created.
2. Product development projects that respond to market demands and adapt to new technological developments should be created.

Businesses can benefit from the designated support by submitting their projects to KOSGEB. Within the scope of the R&D, Product Development, and Innovation Support Program, the upper limit of support for R&D and innovation projects is 1,100,000 TL. However, in some cases, the Administration may issue a project call for proposals, and the upper limit of support for projects responding to this call can be increased to 6,000,000 TL. When determining these projects, the Administration acts in line with the goals set in Development Plans and Annual Programs, as well as priorities in strategic documents. It may increase the upper limit of support provided to regional, sectoral, scale-related, etc., criteria and special target groups.

SME Technological Product Investment (TECHINVEST) Support ProgramThe aim of this program is to commercialize and continue the production of products resulting from R&D and product development processes. The amount of support is determined in two stages:

1. For products in the low/medium-low technology area, a total of 2,000,000 TL, consisting of repayable 1,400,000 TL and non-repayable 600,000 TL.
2. For products in the medium-high/high technology area, a total of 10,000,000 TL, consisting of repayable 7,000,000 TL and non-repayable 3,000,000 TL.

Strategic Product Support ProgramWith this program, KOSGEB aims to increase the production of high-value-added products in medium-high and high-technology sectors in Turkey, which are critical for developing these sectors within the scope of the Technology-Oriented Industrial Initiative Program conducted by the Ministry of Industry and Technology. Thus, it becomes easier to reach the strategic goals determined by the ministry. To apply for this support, it is necessary to make a preliminary application to the Ministry of Industry and Trade to produce the products specified in the Technology-Oriented Industrial Initiative Program call plan. Within the program, up to 6,000,000 TL, consisting of non-repayable 1,800,000 TL and repayable 4,200,000 TL, can be obtained.

Business Development, Growth, and Internationalization Support Programs

The support programs in this group are pretty comprehensive, serving different purposes such as business growth, creating major partnerships, and expanding globally.

SME Energy Efficiency Support ProgramThe aim of this program is to make SMEs more energy-efficient. Within the program's scope, support is provided for various expense items, up to a total upper limit of 1,545,000 TL, for identifying the current situation of businesses, determining needs, forming a strategy, and taking steps in line with the plan.

Business Development Support ProgramThis includes support for SMEs to brand themselves and scale up their operations. Support can be obtained at 60% for various expense items such as trade fair visits, design, testing, and analysis. The total support upper limit is determined as 2,960,000 TL.

Collaboration Support ProgramThis program allows for a total transfer of funds of up to 10,000,000 TL, aiming to develop a culture of collaboration among SMEs or between SMEs and large enterprises. Projects based on multi-stakeholder collaboration principles, such as joint manufacturing, design product and service development, establishment of joint laboratories, and implementation of joint marketing activities, can be realized through the KOSGEB Collaboration Support Program.

SME Development Support Program (KOBIGEL)This program is conducted through project proposal calls issued by KOSGEB. SMEs can receive KOSGEB support of up to 2,000,000 TL by submitting projects to the proposal calls issued within this program. The aim is to support projects developed in nationally prioritized areas.

Overseas Market Support ProgramParticular investments are required for SMEs to expand from local to global markets. With this program, KOSGEB provides up to 300,000 TL in resources, 70% non-repayable and 30% repayable, for businesses wishing to serve international markets.

Living Cultural Heritage Enterprises Support ProgramThe transmission of certain professions requiring mastery and craftsmanship skills, which have become cultural heritage elements, to future generations has gained significant importance, especially in recent years. With this support program, KOSGEB aims to support the survival of such enterprises and sustain the values and philosophy of the profession. Eligible enterprises under the program can receive support of up to 250,000 TL.

SME Financing Supports

KOSGEB SME Financing Supports aim to minimize SMEs' interest or profit share costs in their commercial credit usage. KOSGEB does not directly provide a grant or loan; instead, it provides support in the amount of interest or profit share added to the principal amount obtained from the bank. There are two different programs in this group.

SME Financing Support ProgramSMEs can apply to financial institutions for loans for various reasons such as machinery or equipment purchases, employment increases, and operating expenses. In this case, SMEs incur interest/profit share costs. The SME Financing Support Program can provide support of up to 2,500,000 TL for the interest or profit share portion of the loan used by SMEs. Thus, the loan obtained from the bank turns into an interest-free loan for the enterprise.

Fruit and Vegetable Cold Chain Financial Leasing Support ProgramWith this support program, KOSGEB encourages SMEs to establish a cold chain to reduce fruit and vegetable waste. The financial leasing interest or profit share expenses for investments in domestic and new cold storage units and refrigerated cases/units, which the enterprises will obtain through financial leasing, are covered by KOSGEB under this program. Under the program, support of up to 750,000 TL is provided to the enterprise.

TEKMER Support Program

The TEKMER Support Program is designed to provide pre-incubation, incubation, and post-incubation services to aspiring entrepreneurs who dream of starting a new venture. The upper limit for TEKMER support is set at 6,000,000 TL.

Pre-incubation involves developing the entrepreneurial idea, defining the business model, and providing individual or group training and consultancy services before the company is established.

Incubation includes training, mentoring, technical consultancy, attracting investors, and other services for entrepreneurial ventures.

The post-incubation period encompasses practical steps for market entry and developing growth strategies for businesses completing the incubation process.

Rapid Support Program for Micro and Small Enterprises

This support program was established to mitigate the adverse effects experienced by micro and small enterprises in manufacturing and related sectors during the COVID-19 pandemic. Micro and small enterprises, particularly service and trade sectors, where the impact of the pandemic is relatively high, are provided with support of up to 125,000 TL for each new employee hired, provided that employment is maintained for 12 months. Micro-enterprises can benefit from this support for up to 2 employees, while small enterprises can help for up to 5.

It's important to note that this program is temporary and, in a sense, an emergency program. As the effects of the pandemic diminish, the program may be closed to new applications and phased out of legislation.

Who Can Benefit From KOSGEB Support?

KOSGEB primarily supports activities such as the manufacturing industry, sectors supporting exports, high-technology developments, and entrepreneurship. Support programs are usually designed for specific sectors, as indicated in program regulations and informational materials by NACE (Nomenclature of Economic Activities in the European Community) codes.To find out the NACE code, you can refer to the records of the chamber of commerce to which the business belongs. After finding your company's name, you can see the NACE code in the company details section. Additionally, the portion of the Social Security Institution (SGK) registration number from the second to the seventh digit forms the company's NACE code.You can see the sectors supported by KOSGEB here.

Who Cannot Benefit From KOSGEB Support?

The requirements for applying for KOSGEB support may vary depending on the programs. These requirements are specified in the legislation documents of each support program. Those who do not meet these requirements cannot receive support from that program even if they apply.

Businesses operating in sectors not considered suitable for encouragement by the World Bank cannot benefit from KOSGEB grants and credit support.

Those who wish to benefit from entrepreneurship support must participate in practical entrepreneurship training and obtain a certificate. Entrepreneurs without KOSGEB Entrepreneurship Certification cannot benefit from support. It should be emphasized again that training and certificates must be received before establishing the company. Otherwise, the business owner cannot benefit from entrepreneurship support but can apply for other forms of support.

Businesses with unpaid or unstructured tax or Social Security Institution (SGK) debts are not eligible for KOSGEB support.

Businesses that obtain the product or service they are required to purchase within the scope of the KOSGEB support program from their relatives cannot benefit from grants and credit support.

What are the Differences Between the KOSGEB Grant and Credit Support?

KOSGEB grant support is entirely non-repayable. This means that if you benefit from the support, you do not have to make any repayments.You can think of KOSGEB credit support as zero-interest loans. Within the specified period and conditions the program determines, you are expected to repay all or part of the support you received, but with no interest.

In KOSGEB financing support, the credit is obtained directly from a bank. KOSGEB assists the business by reducing financing costs by supporting the interest portion of the loan.

What Is the Amount of KOSGEB Support?

KOSGEB determines different budgets for each program, considering factors such as the strategic importance of the designated programs, the situation of the businesses, and the investment amount required by the sectors. To receive the support, presenting an invoice or a proforma invoice along with the payment document is necessary. While upper limits for different programs are mentioned in the above sections of our article, examining the program's legislation is necessary to understand the distribution of these supports among expenditure items.

What are the Advantages of Receiving KOSGEB Support?

There are several advantages to receiving support from KOSGEB:

1. Financial Support: KOSGEB provides financial assistance to SMEs and entrepreneurs to help them improve their activities. This support can be in the form of grants or interest-free loans.
2. Training and Consultancy: KOSGEB offers training programs and consultancy services for business owners and entrepreneurs. This helps them gain skills and knowledge in business management, marketing, finance, and others.
3. Marketing and Promotion: KOSGEB supports marketing activities and events that help businesses promote their products and services.
4. Research and Innovation: KOSGEB encourages research and development (R&D) activities and supports innovation. This makes businesses more competitive and allows for the development of new products or services.
5. National and International Opportunities: KOSGEB supports businesses expanding into national and international markets. It increases the growth potential of companies and supports exports.
6. Credibility and Reliability: Businesses that receive KOSGEB support may be perceived as more reliable and reputable by customers and business partners, as it indicates their credibility.

Overall, receiving support from KOSGEB can help businesses grow, innovate, and become more competitive in the market.

How to Apply for KOSGEB Support Programs? What Documents are Required?

The required documents to apply for KOSGEB grants and loans may vary depending on the programs. The registration and application process can be completed through the KOSGEB website and the e-Government system.

How Does the Application Process for KOSGEB Work?

If the conditions specified in the program regulations are met:

• First, the registration process is completed through the e-services available on the KOSGEB website.
• Then, the Business Declaration form is filled out to determine the nature and class of the enterprise.
• Following this, the declaration and company information are reviewed and checked by KOSGEB. If the company information is obtained from administrative records, the system can automatically approve it. If data entry is made outside of administrative records, it is checked by a KOSGEB specialist.
• After the declaration is approved, the applicant is assigned a KOSGEB consultant. The desired support programs are then discussed with the consultant, and the process continues accordingly.