Türkiye: Post-Earthquake Micro, Small and Medium Enterprises (MSME) Recovery project

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The Project will provide US$450 million in the form of reimbursable financing to eligible MSMEs affected by the severe earthquakes in Feb 2023. The Project targets MSMEs that have been negatively affected by the earthquake but were financially viable before the earthquake and are likely to survive the disaster, provided these firms get funding to meet their temporary liquidity needs. The project will have two subcomponents: one on reimbursable financing for eligible MSMEs, and the other one for project management and implementation by KOSGEB. The project will offer liquidity support in the form of reimbursable financing as an extraordinary and temporary relief measure to MSMEs that are deemed financially viable before being hit by the earthquake. Given the huge needs of MSMEs during this crisis time, financial assistance provided by other development partners would become critical. The reimbursable financing will be support financing provided by KOSGEB to eligible MSMEs to cover their operating expenses. It will be disbursed on a “first come, first serve” basis, and the call for proposal will be open for 1 year or when the funds will be fully disbursed, whichever comes first. This will ensure those firms which might not be ready for immediate reopening can benefit, provided they reopen at a later stage when things are more normal. To support more vulnerable groups, 15 percent of total reimbursable financing funds will be earmarked for women owned MSMEs. The MSMEs will repay this financing after a grace period of up to two years, in three instalments over 12 months. The financing will be performance-based as MSMEs will commit to resume operations. In return for the support, beneficiary MSMEs will commit to reopen and continue their business operations, otherwise, they will be asked to begin to pay back the reimbursable financing. There will be no interest on the repayment amount, only the principal will be repaid. The reimbursable financing will be made directly from KOSGEB’s designated project account to the bank accounts of the beneficiary MSMEs. KOSGEB will open a designated account at an acceptable commercial bank. When MSMEs apply for reimbursable financing, they will undertake a commitment, in each case, through a Reimbursable Financing Agreement, on the terms and conditions acceptable to the Bank, for receipt for the financing, and for the repayment on reasonable terms acceptable to the Bank.