Bank lending to MSMEs under CSF breaches P4 billion

MANILA, Philippines — Bank lending to micro, small and medium enterprises (MSMEs) under a credit enhancement scheme breached the P4-billion level a decade after it was launched, the Bangko Sentral ng Pilipinas (BSP) said.

The BSP said the total accumulated loans approved by banks under the Credit Surety Fund (CSF) program since it was launched in 2008 has reached P4.2 billion as of end-November last year.

Of the total amount, P3.9 billion have already been released to 16,993 beneficiaries nationwide.

In the first 11 months of 2017, the BSP said P952 million was released from lender banks to 713 new beneficiaries under the CSF program.

The BSP initiated the CSF program in August 2008 as a credit innovation designed for MSMEs that cannot access 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.

BSP Deputy Governor Diwa Guinigundo said the central bank continues to ramp up the launch of CSF in more cities and provinces nationwide as part of efforts to develop a more inclusive financial system.

He said the program would be launched in the cities of Naga and San Jose as well as the provinces of Camarines Norte and Sultan Kudarat in Mindanao.

“We are looking at launching four CSFs this year,” he said.

Likewise, he added others in the pipeline include the cities of Tacurong and Digos, as well as the province of Dinagat.

Last Nov. 7, the BSP launched a CSF in Batangas City, bringing to 51 the number of cities and provinces covered by the credit enhancement scheme program.

The program now operates in 31 provinces and 20 cities nationwide.

Based on the 2015 statistical data provided by the Philippine Statistics Authority, 99.5 percent of the 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.

Based on an impact assessment survey conducted in 2014 and 2015, the credit obtained from CSFs by MSMEs allowed them to increase their average number of employees by 30 percent, their sales by 26 percent, and their monthly profit by 41 percent.

Likewise, revenues of local government units (LGUs) increased 37 percent from taxes and fees.