The main function of Taiwan SMEG is to provide credit guarantees to SMEs which are promising but short of collateral necessary to obtain finance from contracted financial institutions. There are three methods that Taiwan SMEG grants credit guarantees—Indirect Guarantee, Direct Credit Guarantee and Co-guarantee.
The risk-sharing arrangement is one of the features of Taiwan SMEG. Under the arrangement, apart from the portfolio credit guarantee and certain items of credit guarantee which Taiwan SMEG provides 100% guarantee, Taiwan SMEG takes partial risks of SME loans, and referring financial institutions are responsible for the rest (the smaller portion of the total lending risks).
There are two reasons for Taiwan SMEG to hold this policy. The first one is to request financial institutions to remain paying due attention to SME loan cases even though they are referred to Taiwan SMEG for credit guarantees. The second one is, by such arrangement, to expand guarantee capabilities to more SMEs.
The Client Services Department is functioning to provide guidance to Taiwan SMEG's clients or non-clients in the areas of financing, management, accounting, company control, etc., helping SMEs to increase the efficiency of business operation, lower the capital cost of operation, extricate from predicaments, and improve the ability to secure loans and credit guarantees.
These consulting services are provided through phone calls, interviews, or visits on the clients' sites. Taiwan SMEG has established a Taiwan SMEG Institute which serves as a platform so that SMEs can share and exchange experiences. The institute begins its operation in July 2005.