The main function of TSMEG 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 TSMEG grants credit guarantees—Indirect Guarantee, Direct Credit Guarantee and Co-guarantee.
The risk-sharing arrangement is one of the features of TSMEG. Under the arrangement, apart from the portfolio credit guarantee and certain items of credit guarantee which TSMEG provides 100% guarantee, TSMEG 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 TSMEG 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 TSMEG for credit guarantees. The second one is, by such arrangement, to expand guarantee capabilities to more SMEs.
The Credit Guarantee Services Dept. is functioning to provide consulting services in the areas of financing, management, accounting, corporation governace, etc. It aims to help 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. TSMEG has established a TSMEG Institute which serves as a platform so that SMEs can share and exchange experiences. The institute began its operation in July 2005.