SMEs to provide movable estates as collateral for bank credits
Deputy Prime Minister in Charge of Economy Mehmet Şimşek has announced that a draft bill for a new movable collateral system, which will enable small and medium-sized enterprises (SMEs) to provide movable estates as collateral when applying for loans, would be submitted to Parliament in May.Currently, there are around three million SMEs in Turkey, and to provide easier access to funds and loans for these businesses, this new system aims to resolve the problem of being unable to use properties a tradesman owns as collateral when requesting loans from banks. SMEs account for 99.8 percent of businesses in Turkey; therefore, this has restricted their chance to access and obtain the funding they require to grow.
Şimşek noted that in general, 25 percent of SMEs' assets consist of immovable properties, such as real estate, while 75 percent consists of their receivables, their stock, machinery and equipment plus intellectual property rights. But when it comes to projects worth millions of dollars, businessmen get stuck seeking bank credit, since it is not easy to show real estate worth. In Turkey, just like the rest of the world, the banking system and the financial sector find the pledging and collateralizing of movable estates risky; thus, to resolve this problem, regulations regarding "collateralization of movable properties and a movable property registration system" are currently being drawn up.
This system is applied in various countries around the world, including the U.S. China's credit volume exceeded $3 trillion once it applied this system. While the system being discussed will allow SMEs to put up their movable assets as a guarantee when applying for loans and credits, it will prevent such assets from being collateralized for yet another bank when applying for a loan.
The Treasury Undersecretariat is currently working on the draft bill, and Şimşek announced that they are aiming to submit the draft bill to Parliament by September at the latest to resolve the problem of lack of access to funding suffered by SMEs.
Şimşek noted that in general, 25 percent of SMEs' assets consist of immovable properties, such as real estate, while 75 percent consists of their receivables, their stock, machinery and equipment plus intellectual property rights. But when it comes to projects worth millions of dollars, businessmen get stuck seeking bank credit, since it is not easy to show real estate worth. In Turkey, just like the rest of the world, the banking system and the financial sector find the pledging and collateralizing of movable estates risky; thus, to resolve this problem, regulations regarding "collateralization of movable properties and a movable property registration system" are currently being drawn up.
This system is applied in various countries around the world, including the U.S. China's credit volume exceeded $3 trillion once it applied this system. While the system being discussed will allow SMEs to put up their movable assets as a guarantee when applying for loans and credits, it will prevent such assets from being collateralized for yet another bank when applying for a loan.
The Treasury Undersecretariat is currently working on the draft bill, and Şimşek announced that they are aiming to submit the draft bill to Parliament by September at the latest to resolve the problem of lack of access to funding suffered by SMEs.
Last Update: February 07, 2016 19:21