Many state-based lending schemes remain untapped

Addressing the strong clamor for government-based financial funding, the Philippines Export-Import Credit Agency (PhilEXIM) is calling for associations whose members are exporting products and services to other countries to tap their unique product dubbed as wholesale financing.

During a recently held professional get-together hosted by the Cebu-based alumni of the University of Asia and the Pacific, Alex C. Arabis, PhilEXIM officer in charge for the Business Development Group in Visayas and Mindanao said that their company still have several financing schemes and products that are still untapped by the market.

He said that one of which is the wholesale financing rendered to exporting associations and is personally managed by PhilEXIM.

He said that this particular scheme, PhilEXIM provides an organization with a P25 million credit funding which can be used to provide loan outs to its existing members.

Arabis said that this particular funding works like a revolving fund in which organizations enrolled in this program can also benefit from the interest of each loan outs.

However, unlike formal loans that can be availed in banks and financing institutions, the funding provided to associations through PhilEXIM’s wholesale financing is informal but it is guaranteed to be paperless, fast and is intended for informal lenders.

For this product, PhilEXIM has already been able to tap Cebu-based associations such as the Cebu Gifts, Toys and Housewares (Cebu-GTH) and the Fashion Accessories Manufacturers and Exporters Foundation (Cebu FAME) which has both received P25 million financial funding.

Arabis said that the wholesale financing is a supervised credit wherein associations would be the ones to identify the borrowers which PhilEXIM will screen for approval of loan.

And to ensure that the fund will not be abused, a fund management committee is required to be formed which will also guarantee that the program’s sustainability will be supervised well, said Arabis.

“The associations engaged in the program are required to hire an account officer to become fund managers but the credit committee will be the one to approve the loans. PhilEXIM together with Land Bank will be the ones to provide financial training for the fund manager and will be the ones to do quick credit investigation,” he said.

In terms of benefits, Arabis said that the association receives one percent monthly interest for each loan whereas PhilExim gets 11 percent.

Arabis said that because the fund can be easily accessed by a member of an organization, the interest rates is rather higher compared to formal loans as interest rate reaches to about 23 percent per annum.