SB Corp lowers lending rates

Small Business Corp. (SB Corp.) is reducing its lending rates for rural banks, cooperatives and other micro-finance oriented partners for re-lending to their micro-entrepreneur borrowers.

SME-Funding Entrypoint for Entrepreneurs in Livelihood program (SME-FEEL program) lowers and aligns its interest rate to the SME Unified Lending Opportunities for National Growth or SULONG, which is the national government’s credit window for small and medium enterprises.

Typically, micro-finance institutions charge higher interest rates than market lending rates for business loans. The micro-financing rates range from 15 to 30 percent per annum because of the higher risks and the capability building and values formation entailed in micro-financing schemes.

SB Corp. chairperson Zorayda Amelia C. Alonzo said SME-FEEL program response to the sector’s increasing need for funding, and to provide an incentive to the various micro-financing institutions to lower their interest rates to micro-entrepreneurs.

"We want to give micro-entrepreneurs more liquidity in this time of economic difficulty," Alonzo added.

Interest rate ranges from nine percent per annum for loans availed with a term of one year and below; 11.25percent for loans availed with a term of more than one year to three years; and 12.75percent with terms over three to five years.

SB Corp. gives its micro-finance partners a credit line of up to a maximum of P50 million. They, in turn, re-lend the money to their micro-entrepreneur borrowers up to a maximum of P150,000 per sub-borrower.

Eligible investment areas under the SME-FEEL program are manufacturing, processing, trading and services.

The program has 45 accredited micro-finance partners, and has lent a total of P144.6 million to various micro-finance institutions so far.