On October 28, 2016 in the Ministry of Economy a cooperation agreement was concluded between OJSC “Guarantee Fund” and partner banks, specifically Bank of Asia and commercial bank KYRGYZSTAN.
Also Memorandum on Cooperation was signed between OJSC “Guarantee Fund” and OJSC “State Insurance Company”.
OJSC “Guarantee Fund” was created by Order of the Government of the Kyrgyz Republic from June 23, 2016 on “Creation of OJSC “Guarantee Fund””. To date, the capital of OJSC “GF” is KGS 72 million, funds are allocated from the republican budget. Besides, within the program “Improving Investment Climate – subprogram 2” funds in the amount of USD 3 million will be allocated from the Asian Development Bank. In total, the capital of OJSC “GF” must be about KGS 280 million.
According to results of 2015, share of small and medium-sized enterprises to total GDP made up 40,5 %, that means contribution of SMEs to economy of the country is great and relevant. Thereby, one of the most important instruments of SME development is access to finance, i.e. long-term and easy money.
However, due to insufficient collateral (according to data of banks, from 40% to 50% of borrowers cannot obtain necessary amount of loan), and also due to poor real estate market in regions (requirements of banks for collateral is not less than 120% from the loan amount), loan obtaining is challenging task for SME, especially in regions. Accordingly, all this does not promote development of economy and entrepreneurship.
The aim of the Fund is to provide SMEs with access to financial resources.
The main objectives of the Fund are:
- SMEs loan scheme development;
- Maximum financial satisfaction and support for SMEs incl. start-up projects;
- Increasing SMEs sustainability;
- Increasing production of products and services, sales and tax revenues into the budget;
- Creating new jobs and supporting existing jobs;
- Increasing SMEs financial literacy in business;
To obtain guarantee, entrepreneurs initially apply to partner banks of OJSC “GF” for acquisition of necessary loan amount.