Source of Funding
KOTEC is a non-profit public guarantee institution founded by the government as a direct policy tool to alleviate credit constraints of SMEs. Therefore, direct funding from the government in the form of contribution constitutes a significant source of KOTEC's capital base. Financial institutions also provide contributions as a quasi-tax levied in return for the benefits they earn by participating in KOTEC's credit guarantee scheme. Along with these contributions, other profits from guarantee fee, technology appraisal fee and deposit interests are also the source of KOTEC's equity capital.
Leverage ratio of KOTEC refers to a ratio calculated by dividing total outstanding guarantee by the fundamental property, or the equity capital of KOTEC. It is a key barometer showing the intensity of guarantee usage. A high leverage ratio implies that credit guarantee scheme is working efficiently to ease credit constraints of SMEs, meeting the objective of additionality and financial inclusion. However, the upper limit of the leverage ratio is set at 20 times the fundamental property of KOTEC to ensure sustainability of the fund.