Garanti Bank has received a €50 million loan from the EBRD for supporting small businesses. The loan aims to boost the Turkish SME sector and promote lending to women entrepreneurs.
Garanti Bank is one of two Turkish banks that the EBRD is financing since it started lending to the country's banking sector in October 2009. The first was DenizBank: the EBRD financing of €20 million targeted the development of the agricultural private sector. The €50-million loan to Garanti Bank is aimed at supporting micro, small and medium-sized enterprises. Over the past five years, Garanti has lent about €7 billion to 443,000 micro, small and medium-sized businesses but the sector remains hungry for finance, which has become scarcer as a result of the global financial crisis.
Small businesses feed the economy
The importance of small businesses to the Turkish economy is best told in figures. Over 1.7 million small to medium-sized enterprises provide over 76 per cent of Turkey's total employment, but these enterprises receive only 25 per cent of loans from the Turkish banking sector. Businesses in rural areas are particularly affected.
In November, the EBRD teamed up with the Netherlands Development Finance Company, the International Co-operation and Development Fund (TaiwanICDF) and five commercial banks to lend €50 million to Garanti Bank. The financing will be available for investments in small companies operating outside the three main Turkish cities of Ankara, Istanbul and Izmir.
A focus on women
Another special feature of the loan is that it will promote lending to women entrepreneurs. As part of its commitment to increasing the contribution of Turkish women entrepreneurs to the wider economy, Garanti Bank has developed the Woman Entrepreneurs' Support Package, the first of its kind designed by a private bank in Turkey.
About 7,400 female entrepreneurs have benefited from the package, which includes consumer loans with special rates, letters of credit, long-term loans for small businesses and even pension programmes. Businesswomen are also invited to participate in specially tailored meetings and training sessions or enter Garanti Bank’s competition to find Turkey’s Woman Entrepreneur.
"When we first met with Garanti Bank in February 2009, we were impressed by their experience of over a decade in micro, small and medium-sized business lending spanning 679 branches across Turkey,” says Oksana Pak, EBRD Senior Banker in the Small Business Finance team and the operation leader for the Garanti Bank deal
“Their focus on women entrepreneurship caught our attention, given the EBRD’s commitment of promoting gender equality through its investments,” adds Ms Pak. “We tried to support Garanti Bank's efforts in promoting women entrepreneurship across Turkey by placing a special focus on gender in our loan.
“One way of supporting the engagement of women in the formal sector as entrepreneurs is through the Small Business Finance products offered to local banks,” says Henry Russell, EBRD Director of the Small Business Finance team.
With research indicating that female entrepreneurs are missing out on opportunities to access finance, Garanti Bank is set to become the bank that not only lends to businesswomen but also works to empower them with knowledge and provide opportunities.