According to IRNA, from the public relations of the Small Industries Investment Guarantee Fund; "Mohammed Hossein Moqiseh" pointed to the government's supporting role for small industries and added: The main problem that small industries face in the world is the financing gap. The financing gap refers to how much of the financing needs have been met and how much has yet to be met.
He stated: According to the latest statistics of the International Association for Financing Small and Medium Enterprises, out of 200 million small and medium enterprises that need financing, 41% have unmet financial needs, and most of these micro, small and medium enterprises are in countries in are currently developing, and the financing gap of these companies in developing countries is estimated to be around 5 thousand billion dollars.
In response to the question of the reason for the financing gap, Moqiseh said: because micro, small and medium enterprises have been unable to provide guarantees and securities requested by financial and credit institutions.
The CEO of the Small Industries Investment Guarantee Fund went on to say: In a division, financing can be done in "debt format" or in "capital format". In debt-based financing, the economic enterprise provides the financial resources it needs by creating debt with various means. This creation of debt can be through borrowing from individuals, banks or other financial and credit institutions, which is the main financing method in Iran's economy.
He stated that in this case, the economic enterprise must repay the debt, which includes the principal and interest, at the due date, and this obligation to pay is basically considered a type of risk for the creditor, so the desired guarantees and securities are taken to cover it. , which can be considered as a negative aspect of this type of financing. Providing the collaterals and guarantees desired by the creditor for small and medium-sized enterprises all over the world is considered a serious and fundamental challenge. The positive point of financing in the form of debt is that the recipient of the facility does not have to give up part of the shares or ownership of his company, and 100% of the shares will remain in the hands of the shareholders.
The reason for the attractiveness of financing in the form of capital
The Chairman of the Board of Directors of the Small Industries Investment Guarantee Fund further added: In financing in the form of capital, generally, a part of the company's ownership and shares are given to the investor in return for receiving the capital. Losing part of the ownership and management power is considered a negative aspect of this type of financing, and on the other hand, the lack of repayment obligation and the absence of risk and concern caused by it are considered positive points of this type of financing.
Moqiseh pointed out: everywhere in the world, and of course in Iran, the financing of small and medium enterprises is mostly done in the form of debt. Because many small companies may not have the necessary capabilities and conditions (high transparency and appropriate and stable profitability) to be in the capital market. This is the reason why most of them turn towards financing through debt, and naturally, the need to provide guarantees will be raised. Due to the limitations of small businesses in providing collateral required by the creditor, the guarantee fund, as a government and support institution, can play its supporting role by issuing guarantees that replace the collateral required by the creditor, in order to provide financing under suitable conditions. Need to be done.
Small businesses are a means of economic development and poverty reduction
Pointing out that small businesses have many roles and privileges in the economy that are irreplaceable, he said: The most important privilege of small businesses in the world is that they account for ⅔ of employment, as much as 90 percent of innovation and entrepreneurship in companies. It happens in small and medium enterprises and half of the national gross product is created in these enterprises. Therefore, small and medium enterprises can be considered an effective tool in economic development and poverty reduction in the economy. These companies also reduce the problems caused by unemployment. They can also balance the income distribution in the geographical area.
Moqiseh added: The impact of small industries in the economy is so attractive, important and influential that governments consider supporting them as one of their serious and important programs. These supports are provided in several formats such as low-cost facilities, grants and infrastructure assistance. But none of them can seriously reduce the mentioned funding gap. With the experiences gained in the last century in developed or developing countries, the creation of guarantee funds in various economic sectors is considered the most efficient tool to reduce the financing gap, and these funds have an undeniable role in financing businesses.
Iran's experience compared to other Asian countries
Moghiseh continued: It can be said that the existence philosophy of the funds and the process of their formation is to fill the financing gap and provide credit guarantees. In the Iranian economy, the establishment of guarantee funds in various economic sectors has an experience of about 50 years.
He added: First, developed countries promoted the model of credit guarantee schemes (in the form of guarantee funds) and in the past decades, small and medium enterprises grew. In Asian countries, the two countries of Japan and Korea are leaders in this field, and in the past decades, Japan and Korea helped the developing countries of East Asia to facilitate financing for small and medium industries by establishing guarantee funds.
Credit guarantee is the main product of funds all over the world
Regarding the difference between the products offered by the guarantee funds in the world, Moghiseh said: more than 90% of the products offered by the funds in the world are credit guarantees. As we mentioned, the most important problem and challenge of small industries is the financing gap, and the most effective tool to facilitate financing is the credit guarantees that are issued in these funds.
The CEO of the Small Industries Investment Guarantee Fund added: In addition to this issue, every economy may have additional services for this purpose according to its needs and business environment. As we in the small industry investment guarantee fund offer contractual or contractual guarantees in addition to credit guarantees, another country may offer another service in addition to credit guarantees as a by-product.
Easier conditions for the credit guarantee of knowledge-based companies
In the end, Moghiseh stressed: Since this year's slogan emphasizes on knowledge-based production and job creation, naturally, we also focused on this issue in the guarantee fund, and we believe that small industries that have knowledge-based products can contribute to economic development in a more effective way. help For this reason, the conditions for granting fund guarantees to knowledge-based companies are different, and in the form of the regulations we have, we offer guarantees to these companies in a more special way and with easier conditions.
Source https://www.globalcourant.com/small-businesses-are-a-tool-for-economic-development-and-poverty-reduction/?feed_id=12002&_unique_id=62fc8ad0787d7
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