Credit Surety Fund releases P5.8 B loans to MSMEs

MANILA, Philippines — The credit enhancement program established by the Bangko Sentral ng Pilipinas (BSP) launched more than a decade ago paved the way for the release of P5.8 billion worth of loans to micro, small and medium enterprises (MSMEs), according to BSP Governor Benjamin Diokno.

Diokno said the cumulative approved loans have benefited nearly 18,000 MSME-beneficiaries nationwide as of end 2018 since the Credit Surety Fund (CSF) was launched in 2008.

In a speech during the membership luncheon meeting of the European Chamber of Commerce of the Philippines (ECCP), Diokno said 54 CSFs have been established nationwide since its inception in 2008.

“The CSF is a credit enhancement program that allows MSMEs, which are members of cooperatives, to borrow from banks using the CSF surety cover as security for the loan in lieu of conventional collateral,” Diokno said.

Data from the Philippine Statistics Authority (PSA) showed 99.5 percent of business establishments in the Philippines are MSMEs.

One of the roadblocks for their continued growth is access to financing, prompting MSMEs to succumb to loan sharks or the “5-6” lenders who charge exorbitant interest rates.

The BSP initiated the CSF program in August 2008 as a credit innovation designed to improve 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 CSF provides up to 80 percent surety cover for loans granted by banks to borrowers that would otherwise have difficulty assessing such credit facilities due to insufficient collateral, limited credit histories, and inadequate financial records, among other barriers.

Diokno said the BSP is pursuing a long lasting growth through the National Strategy for Financial Inclusion (NSFI) that provides a platform for both public and private sector coordination to ensure synergy of efforts.

“To achieve this, here are some of our financial inclusion initiatives in order that no one will be left behind,” the BSP chief said.

According to Diokno, the range of microfinance loans offered by banks has broadened from regular microloans to microcredit for agriculture, housing and business, as well as micro-insurance in line with the growing needs and strengthened capacities of banks’ clients.

Latest data showed there are 159 banks with microfinance operations serving 1.98 million micro-entrepreneurs as of end 2018.