Small businessmen shy away from special financing program

Despite liberal terms provided under its P2.5-billion Special Financing Program, the Social Security System (SSS) has disbursed only P367.8 million to small and medium enterprises, indicating continued pessimism among small businessmen.

The low availment rate has been plaguing the program since it was instituted by government with the SSS and the Government Service Insurance System (GSIS) as fund managers of P2.5 billion each.

The P367.8 million released covers all releases since the fund was instituted in 1998, showing a total of 33 individual projects.

This leaves a total of P2.132 billion still availabel for relending through conduit banks and the Economic Monitoring Group said there was no way to find out how much the GSIS had released since there was "no data available."

In a report to the EMG, the SSS said 58 percent of the disbursed amount equivalent to P272 million went to manufacturing projects while nine percent equivalent to P52 million went to food production-related enterprises. The remaining P43 milliion went to services.

Opened at the height of the financial crisis that crippled the region in 1998, the P5-billion facility was intended to tide SMEs over during the financial backlash that made funds virtually inaccessible due to soaring interest rates and banks' general reluctance to lend.

Of the accredited conduit banks, only a core of four banks actively participated in the program, granting more than two loan applications each out of SSS' P2.5 billion. These were Export Import Bank, Equitable Banking Corp. and Planters Development Bank.

According to the EMG, the low availment rate could have been due to the perceived low credit worthiness of SME borrowers although borrowers were themselves relucant to borrow even at the fixed rate offered by the program.

Under this facility, SMEs can borrow up to P50 million to finance such activities as construction of building, acquisition of machinery and equipment and working capital.