BSP opens more credit to MSMEs

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is launching more credit surety funds in the provinces to give micro, small and medium-sized enterprises (MSMEs) more access to formal sources of financing.

BSP Governor Amando Tetangco Jr. recently led the launching of the Metro Cebu Coopreneurs Surety Fund (CSF) giving 16 cooperatives in Metro Cebu access to collateral-free loans.

The Metro Cebu Coopreneurs Surety Fund has so far raised P33 million in surety cover through contributions from the state-run Development Bank of the Philippines (DBP), Industrial Guarantee and Loan Fund (IGLF), the Cebu City local government and its 16 cooperatives.

Tetangco said the launching brought to 11 the number of CSF set up by the BSP in a little over 14 months.

CSFs have been organized in Cavite and Aurora provinces in Luzon; Compostela Valley, Davao del Norte, Davao Oriental and North Cotabato in Mindanao; and Bohol, Negros Oriental, Negros Occidental, and Iloilo City in the Visayas.

A brainchild of the central bank, the CSF is a program that involves the creation of a trust fund contributed by cooperatives from a province and its provincial government intended primarily to make MSMEs bankable by giving them access to formal sources of financing by means of a surety cover.

Basically, MSMEs that could not get financing due to the absence of collaterals could now do so using the surety cover as substitute.

The CSF concept was first introduced with the launching of the Cavite Coopreneurs Surety Fund in the Province of Cavite in August 2008, followed by the Aurora province Coopreneurs Surety Fund in January 2009.

The CSF program received overwhelming reception as it opened a wider source of financing for MSMEs. It was also welcomed by the banking sector as the program makes it more comfortable for them to lend even in the absence of collaterals.

The BSP hopes to cascade the CSF concept to all key areas of the country.