GMA urges SMEs to take advantage of P10-B fund for promising enterprises

President Arroyo urged small and medium enterprises (SMEs) yesterday to take advantage of the government infusion of P10 billion as new funds to promising enterprises.

The President, who issued the call during the SMEs Forum on the National SME Agenda at the Metropolis Mall in Alabang, Muntinlupa City, said the amount would be made available for the next six months.

The event, the President said, was held in Muntinlupa City because the city is considered the most SME-friendly city in the Philippines.

"There’s P10 billion available. Use it and create jobs for our people," the President exhorted the small entrepreneurs.

Another P10 billion would be made available for the following six months, the President added.

Mrs. Arroyo said a lot of the loan would be made available to deserving SMEs in the National Capital Region (NCR) and Regions 3 (Central Luzon) and 4 (Southern Tagalog) to offset the unemployment rate in the regions.

But she noted that her minimum requirement is to have P1-million loan to every town around the nation.

In explaining the interest rates for SMEs, the President assured that short-term loans would be given a single-digit rate of nine percent while medium-term wil be at 11.25 percent and three-year-term borrowings would have 12.75 percent as maximum interest rate.

The President also stressed that the government would have to "standardize" its requirements for loans, citing the unnecessary requirement of banks for SMEs to submit income tax returns.

"The main job of the bank lending money is to make sure that it lends money to a credit-worthy enterprise. Let us not mix up the SMEs, after all the tax evaders are really not the SMEs," she said.

Aside from real estate, among the collaterals allowed for borrowers would be post-dated checks, assignment of life-insurance and guaranteed cover, (in case of franchise) the corporate guarantee or assignment of lease rights to the bank or (if for export), the assignment of letters of credit, purchase orders or sales, invoices, the President said.

Mrs. Arroyo said that with the new agenda on SMEs, jewelry manufacturers in Bulacan could be better organized and, "therefore, would get better prices for their products."

"For the producers in Negros, you can have a wider market reach. For the furniture industry in Cebu, you can even be more competitive and in areas where there are many SMEs, such as the NCR, Regions 3 and 4, we hope to have an expansion of common service facilities," she said.

The Chief Executive has given SME development the much-needed support as she prioritized SMEs among the main beneficiaries of a national program known as her Eight-Point Reform Agenda.

The President has called on the nation to take an active part in stimulating the domestic demand, rather than rely on the export market.

To stir up domestic consumption, she asked that more capital to be infused in SMEs.

The President has ordered state financial agencies to step up efforts to provide loanable funds for SMEs, while calling on commercial banks to expand lending programs for SMEs.

Providing the financial facility, product and technology development, training and marketing support will give rise to new entrepreneurs and expand the potentials of micro and small enterprises.