Loans to MSMEs under credit enhancement program hit P1.9B

MANILA, Philippines - Total loans approved by banks to micro, small and medium enterprises (MSMEs) under a credit enhancement scheme reached P1.91 billion over the past seven years, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

Of the total amount, the BSP said P1.66 billion have been released to 14,613 beneficiaries of the Credit Surety Fund (CSF) program as of end August this year.

“These figures continue to grow as the program penetrates the grass roots,” the BSP said.

The BSP initiated the CSF Program in August 2008 as a credit innovation designed to improve formal access to bank credit due to lack of acceptable collaterals and credit information.

The CSF, through the issuance of a surety agreement, allows cooperatives and businessmen with viable business plans, but limited capital, to obtain loans from banks even in the absence of hard collaterals.

The central bank is set to launch another CSF in Parañaque City tomorrow.

BSP Governor Amando Tetangco Jr., together and Parañaque City mayor Edwin Olivares, would lead the signing of the memorandum of agreement with partner institutions and participating cooperatives.

About 13 of the city’s well-capitalized cooperatives have signified their intention to join the Parañaque City CSF by pledging P4 million, while the city government pledged P3 million.

The Parañaque CSF would be the 44th in the Philippines and the third in the National Capital Region (NCR). The stakeholders in the city are optimistic more MSMEs in need of financial help would benefit from the program.

The credit enhancement program is aimed at helping unbankable MSMEs gain access to formal sources of credit.

The fund created by the pooled cash contributions of participating well-capitalized and well-managed cooperatives, local government units and partner institutions, serves as an alternative to hard collaterals and thus improve the bankability and creditworthiness of MSMEs who are short of collaterals.

The BSP is also set to launch the CSF program in Cabanatuan City in Nueva Ecija on Nov. 9.

Now on its 7th year of operations, the CSF Program has been institutionalized in 30 provinces and 14 cities nationwide.