Small Business Corp raises 2003 lending target to P2B

The Small Business Corp. (SB Corp.) has surpassed its full-year target of P1.6 billion in terms of lending and guarantees in only 10 months, officials said.

As of end-October, SB Corp. reported a total of P1.7billion or P100 million over this year’s target prompting officials to set new targets. The original programmed lending and guarantees for the first 10 months was placed at P1.3 billion.

"We could now look at possibly reaching the P2-billion mark by the end of the year," Benel P. Lagua, president and chief operating officer of SB Corp., said.

Of the total amount, wholesale and retail lending reached P1.457 billion while guarantees extended amounted to over P200 million.

Lagua, however, lamented that the guarantee market could have been extensively developed this year if it has a sovereign risk guarantee, or its guarantees backed directly by the National Government (NG).

Several private banking and financial institutions, both foreign and domestic are prepared to extend loans to small and medium enterprises (SMEs) with the SB Corp. as guarantor. However, they want the SB Corp. to carry a sovereign guarantee.

But under its charter, SB Corp. does not have a sovereign risk guarantee. Legislation is required for amendments in its charter.

Theoretically, it could ask the NG for a sovereign guarantee cover. However, the NG has a ceiling for extending sovereign guarantees which are unfortunately, reserved for big ticket items.

"As far back as the 90s, guarantees already reached over a billion pesos," Lagua said.

SB Corp. is the "new" government financial institution (GFI) formed from a merger between the Guarantee Fund for Small and Medium Enterprises (GFSME) and the Small Business Guarantee and Finance Corp. (SBGFC). It is under the Department of Trade and Industry (DTI).

The defunct GFSME had a sovereign risk guarantee but unfortunately it was not transferred to SB Corp.

Meanwhile, SB Corp. chairperson and chief executive officer Alicia C. Alonzo said she was optimistic that the Philippines will learn more from the experiences of its Asian neighbors in terms of re-insurance institution building for SMEs, credit supplementation, and joint or initial guarantee system.

"On the other hand, we would be more than willing to share our experiences to our counterparts especially in the area of credit techonology for SMEs," Alonzo told newsmen.

She added: "Credit guarantee for SMEs locally has not reached its full potential. Our Asian neighbors consider credit and credit guarantees as important tool in energizing the economy."

In Japan, practically every province has at least one credit and credit guarantee entity for SMEs. In Malaysia and Korea, it has started providing guarantee programs through the Internet.

In the Philippines, SB Corp. has to get the commitment of private banks, which it calls accredited financial institutions (AFIs) as banks remain reluctant to lend to SMEs. They will only do so with the risk or loan guarantee of the GFI.