ALTERNATIVE APPROACH to SME FINANCING: PROJECT BANKING

Abstract

Project financing is considered as an alternative financing method also for the small and medium-sized enterprises (SMEs) as building blocks of economy in a country and it plays an important role in countries' growth and development phases thanks to the long-term and large-scale financing opportunities it creates. It is of crucial importance for SMEs to secure strong and stable financing support in order to look for new investment projects and carry out each phase of their projects to completion with success. At this point, as a method that comprises all traditional financing methods, project financing allows SMEs to manage their investments within an institutional framework and paves the way for sustainable growth both for SMEs and for the overall economy. Currently, the Turkish banking sector mainly offers a financing system dominated by commercial banks, and as such, it fails to address the project financing needs of SMEs in terms of maturity and volume. With the financing method to be implemented in future under the name of "Project Financing," it will be possible to attract foreign capital in circulation at global markets to our country and create a substantial source for financing the projects to be developed by SMEs. In this article, we will try to indicate that this method will be more efficient and secure more benefits from income generating projects by making it possible for SMEs to obtain financing at longer terms, with more suitable conditions and in larger volumes.