Who Can Benefit from KOSGEB Support? Application Requirements and Legal Process

KOSGEB support programs are an important financing tool for entrepreneurs who want to start a new business, as well as for small and medium-sized enterprises (SMEs) that want to improve their existing businesses, increase production capacity, complete their digital transformation, or expand into new markets.

However, not every business that registers with KOSGEB automatically receives support. The business must qualify as an SME, operate in the supported sector, have the correct NACE code, have an up-to-date business declaration, and meet the specific conditions of the support program applied for.

One of the most common problems regarding KOSGEB support programs is that entrepreneurs evaluate the support conditions based solely on general information. However, each support program has different application periods, sector requirements, business age, company type, supported expenses, and evaluation methods.

Therefore, before applying to KOSGEB, it is necessary to examine not only whether the business is eligible for KOSGEB support, but also all the specific conditions of the program being applied for.

What is KOSGEB?

KOSGEB stands for the Small and Medium-Sized Enterprises Development and Support Administration. The institution runs various support programs with the aims of developing entrepreneurship, increasing the competitiveness of SMEs, improving their production capacity, and supporting digital and green transformation.

KOSGEB support programs are not limited to a single program. There are various programs with different purposes and application requirements, such as the Entrepreneur Support Program, Capacity Building Support Program, Business Development Support Program, and R&D, Product Development, and Innovation Support Program. The current support programs and application calls may change periodically.

Therefore, the fact that a business has benefited from a particular support program in previous years does not mean that the same support continues under the same conditions today. The program regulations, implementation guidelines, and call for applications in effect at the time of application should be reviewed together.

Who can benefit from KOSGEB support?

Generally, entrepreneurs and micro, small, and medium-sized enterprises (SMEs) can benefit from KOSGEB support. However, the scope of individuals and businesses that can benefit from the support varies depending on the program applied for.

Some programs are aimed at newly established businesses. Other programs require the business to have been in operation for a certain period, achieve specific growth rates, or operate only in designated technology and production sectors.

In general, businesses wishing to benefit from KOSGEB support are expected to meet the following basic conditions:

1. To be a natural or legal person operating under the Turkish Commercial Code,
2. To qualify as an SME (Small and Medium-sized Enterprise),
3. Being registered and active in the KOSGEB database,
4. Having an up-to-date business declaration,
5. To operate in a sector supported by KOSGEB,
6. Meeting the specific requirements of the support program applied for
7. Submit the application form and all attachments completely and within the deadline.

These are general conditions. Meeting these conditions alone does not guarantee that the application for support will be accepted. Especially in project-based programs, applications are evaluated and scored based on technical, financial, and commercial aspects.

What are the requirements for being considered an SME (Small and Medium-sized Enterprise)?

To benefit from a significant portion of KOSGEB support programs, businesses must qualify as SMEs (Small and Medium-sized Enterprises).

Following the update in 2025, SME classification is determined based on the number of employees and annual net sales revenue or balance sheet size.

Accordingly:

• Micro-enterprise: A business with fewer than 10 employees annually and whose annual net sales revenue or financial balance sheet does not exceed 10 million TL.
• Small business: A business with fewer than 50 employees annually and whose annual net sales revenue or financial balance sheet does not exceed 100 million TL.
• Medium-sized enterprise: A business with fewer than 250 employees annually and whose annual net sales revenue or financial balance sheet does not exceed 1 billion TL.

In determining whether a business qualifies as an SME, it may not be sufficient to consider only the number of employees and financial data of the business itself. If there are capital and management relationships with affiliated businesses, joint ventures, or other companies, these relationships may also need to be evaluated.

Therefore, the SME status of companies, especially those within a group of companies, holding significant stakes in other companies, or whose partners have connections to other businesses, should be carefully examined.

Business declarations filled with incorrect or incomplete information may result in the rejection of support, subsequent cancellation, or the recovery of payments already made.

Why are the Field of Activity and NACE Code Important?

The company's field of activity and NACE code are of great importance in order to benefit from KOSGEB support.

The NACE code is a classification code that indicates the type of economic activity of a business. The sectors supported by KOSGEB (Small and Medium Enterprises Development Organization) have been determined in accordance with the Presidential Decree dated February 1, 2025. It has been stated that during the transition process to the NACE Rev.2.1 classification, the old NACE Rev.2 classification may also be used in some processes.

An inconsistency between the business activity stated on a company's tax certificate or trade registry records and the activity it actually conducts may lead to the rejection of the application.

For example, if a business is actually engaged in software development but its tax records only show consulting or retail trade activities, it may be deemed not to have the appropriate NACE code for the program it is applying for.

Therefore, before applying to KOSGEB, it should be checked whether the following records are consistent with each other:

• Commercial registry records,
• The company's articles of association specify its areas of activity
• Main and subsidiary activity codes on the tax certificate,
• Social Security Institution workplace records,
• KOSGEB business declaration,
• The subject of the activity described in the project.

Changing the NACE code solely for the purpose of applying for support may not be sufficient on its own. The business may be expected to have business records, invoices, personnel, machinery, equipment, and business organization that can demonstrate that it is actually carrying out the relevant activity.

Can newly established businesses receive KOSGEB support?

Newly established businesses, especially those participating in the Entrepreneurship Support Program, can benefit from KOSGEB support.

In the current Entrepreneurship Support Program, businesses applying for Business Establishment Support must operate in sectors supported by KOSGEB and be between 0-1 years old. For Business Development Support, businesses must operate in specific sectors such as manufacturing, telecommunications, computer programming, IT infrastructure, data processing, or scientific research and development, and be between 0-3 years old.

The age of the business can be assessed based on its establishment date or the start date of its tax liability. Therefore, if applying for support, the company's establishment time and the application schedule should be planned together.

An entrepreneur can also apply by establishing a joint venture with other individuals. However, the current Entrepreneur Support Program requires that the entrepreneur's ownership stake in the business be at least 50%, that this stake does not fall below 50% during the program period, and that the entrepreneur be authorized to represent the business individually.

Due to these conditions, the partnership agreement, share ratios, and representation authorities established during the company's formation should be evaluated before applying to KOSGEB. Authorizing the entrepreneur to represent the company with joint signatures in the company's articles of association may result in the company not meeting the application requirements for some programs.

Can sole proprietorships receive KOSGEB support?

Sole proprietorships can also benefit from KOSGEB support if they meet the requirements of the program they applied for.

For example, the Entrepreneurship Support Program's Business Establishment Support stipulates different establishment support amounts for sole proprietorships and corporations. The current program provides 10,000 TL in establishment support for sole proprietorships and 20,000 TL for corporations. Additional support may be provided if the entrepreneur is a woman, young person, disabled person, veteran, or a first-degree relative of a martyr.

However, not every program is open to sole proprietorships. Some support programs may require the business to be established as a limited liability company or a joint-stock company. Indeed, some capacity-building support programs have specific conditions regarding company type, business size, growth status, and sector of activity.

Therefore, when choosing a company type, not only establishment costs and tax burden should be considered, but also the conditions of the support programs that may be applied for in the future, which are specific to that company type.

Registration and Business Declaration in the KOSGEB Database

To apply for KOSGEB support, a business must first register with the KOSGEB database. Registration is done through KOSGEB's e-Services system.

After registration, a business declaration is completed to determine the nature and class of the business. If the information in the declaration can be fully obtained from administrative records, automatic approval can be given by the system. Information that cannot be obtained from administrative records or that has been entered separately may be reviewed by a KOSGEB expert.

The following information must be accurate in the business declaration:

• Partnership structure,
• Number of employees,
• Annual net sales revenue,
• The total of the financial balance sheet,
• Main and ancillary activity codes,
• Affiliated or joint business relationships,
• The legal status of the business.

The legal and financial responsibility for any inaccurate or misleading information provided through the KOSGEB system rests with the business. False statements may not only lead to the rejection of the current application but also to the recovery of previously paid support and, depending on the nature of the case, to the initiation of administrative or criminal proceedings.

How to Apply to KOSGEB?

KOSGEB applications are mostly made through the e-Government and KOSGEB e-Services systems.

The application process generally proceeds as follows:

1. Establishing the business and creating the necessary trade or tax registrations,
2. Registration in the KOSGEB database,
3. Preparation and updating of the business declaration,
4. Identifying the appropriate support program,
5. Preparation of application forms and project documents
6. Uploading documents to the system,
7. The application must be approved electronically before the deadline
8. The application is submitted for review, board or jury evaluation.

In the Entrepreneurship Support Program's Business Development Support, simply submitting a draft application to the system is not sufficient. The application must be completed by clicking "Approve Application" before the deadline. Projects not approved within the deadline will not be considered.

Therefore, considering potential technical issues that may arise on the application deadline, it is important not to leave the application until the last day.

Will every application be accepted?

Meeting the application requirements for KOSGEB support does not automatically guarantee that the support will be granted.

For some support programs, applications are first checked for formal and administrative aspects. Applications may not proceed to the evaluation stage if the application requirements are not met, if mandatory documents are missing, or if the documents do not conform to the specified format.

In the Business Development Support program, applications that have passed the formal review are evaluated and scored by a committee and jury, and the projects to be supported are determined according to the ranking. The committee may also decide which requested expenses will be covered by the support, the amount, and the technical specifications.

Therefore, it is not mandatory to accept all expenses requested by the business. Even if the project is approved, some expenses may be completely or partially excluded from the scope of support.

Which expenses are covered by KOSGEB?

Supported expenses vary from program to program.

Under the Entrepreneurship Support Program's Business Development Support, expenses for personnel, machinery, equipment, molds, software, and certain services can be supported. Some expenses related to training, consultancy, certification, testing, analysis, marketing, design, and industrial property rights may also be considered under the program's conditions.

However, expenses such as renovation, decoration, vehicles, real estate, land, animals, and business premises rent are not covered by the same program.

Whether expenses incurred by the applicant prior to the support decision are eligible for support is also evaluated separately according to the application guidelines, taking into account the content of the invoice, whether the payment was made through a bank, and whether the goods or services were purchased from related parties.

Therefore, making expenditures before a support decision is made may result in the business being unable to reclaim the expense from KOSGEB later.

Why are KOSGEB applications rejected?

The main reasons for the rejection of KOSGEB applications are as follows:

• The business does not operate in the supported sector,
• The NACE code does not match the program applied for
• The business declaration is not up-to-date
• The business does not qualify as an SME,
• The business age exceeding the program limits,
• Failure to meet the partnership and representation conditions,
• Failure to electronically approve the application within the deadline,
• Incomplete or incorrect submission of required documents,
• The project was not deemed financially sustainable
• The requested expenses are not eligible for support
• Inconsistencies between project descriptions and financial statements,
• Making false or misleading statements.

General, abstract, and immeasurable statements used in the application form can also lead to a low score for the project. The project should concretely explain the target customer group, market size, competitive advantage, revenue model, production plan, personnel needs, and the relationship between expenses and the project.

Can I appeal a KOSGEB rejection decision?

Whether an appeal against a KOSGEB rejection decision is possible depends on the implementation principles of the support program applied for.

Some support programs have internal appeal forms and appeal evaluation processes against rejection decisions. For example, current KOSGEB documents regarding Business Establishment Support include appeal forms and appeal decision forms. In contrast, it is stated that the control, evaluation, and ranking processes in Business Development Support are final and cannot be appealed within the institution.

The provision that "no objections can be raised within the institution" does not mean that the administration's actions are not subject to any legal review. According to Article 125 of the Constitution, judicial review is available against all actions and decisions of the administration.

However, filing a lawsuit regarding every rejection decision does not guarantee that the lawsuit will be accepted. The administration has discretionary power, particularly in technical scoring and suitability assessments conducted by the board or jury.

The legal review should particularly consider the following points:

• Whether the application was rejected based on an incorrect legal provision,
• Whether the applicant was treated equally and fairly,
• Whether there are any obvious factual errors in the evaluation,
• Whether the application documents have not been reviewed at all or have been misinterpreted,
• Whether the decision contains sufficient and verifiable grounds,
• Whether the administration acted in accordance with its own procedural principles,
• Whether there is any illegality in terms of authority, form, reason, subject matter, or purpose.

If you are considering filing a lawsuit against the rejection decision, the date of notification must be recorded and the lawsuit period carefully calculated. Unless a specific time limit is stipulated in administrative law, the general lawsuit filing period is 60 days from the day following the written notification.

Cancellation of KOSGEB Support After a While

The acceptance of a support application does not mean that the business is relieved of subsequent obligations.

The supported business will receive funding during the project period and, in some cases, after the project;

• Continuing the business operation,
• Using the approved expenses for their intended purpose
• Keeping invoices and payment documents,
• Not to transfer supported machinery and equipment without authorization,
• Fulfilling its employment commitments,
• Maintaining the terms of partnership and representation
• Providing the necessary documents for monitoring and audits,

It may be necessary.

If the support conditions are violated, support may be terminated, payments may be withheld, or previously paid amounts may be reclaimed with legal interest.

In particular, changes in the company's ownership structure, the closure of the business, initiation of liquidation proceedings, the sale of supported machinery, or the failure to actually incur expenses shown in the project can have serious legal consequences.

Why is legal support important in a KOSGEB application?

A KOSGEB application is not merely a project proposal or a funding application. The application process involves declarations and commitments that may have consequences under company law, administrative law, commercial law, tax law, and, where applicable, criminal law.

A legal review will be conducted prior to the application;

• The company type and ownership structure can be adapted
• The company's articles of association may regulate representation powers
• Discrepancies between NACE code and business activity can be resolved
• Inconsistencies may be identified in the application documents
• The support agreement and undertakings can be reviewed
• The legality of the supported expenses can be evaluated
• Appeal procedures against refusal or refund decisions may be established.

Incorrect company structuring or an inadequately prepared application can not only result in the loss of support but also cause the business to face subsequent repayment and interest burdens.

Conclusion

Entrepreneurs and micro, small, and medium-sized enterprises (SMEs) can benefit from KOSGEB support. However, being an SME alone is not sufficient to be eligible for the support.

The business must operate in the supported sector, have the correct NACE code, be registered in the KOSGEB database, submit an up-to-date business declaration, and meet the specific conditions of the program applied for.

Each support program has different requirements in terms of business age, field of activity, company type, ownership structure, application period, and supported expenses. Therefore, the current call for applications and the implementation guidelines should be reviewed together before applying.

If a KOSGEB application is rejected, the support is cancelled, or the amounts paid are requested back, a legal course of action should be developed taking into account the reasoning behind the decision, the applicable legislation, and the application deadlines.