Banks approved P1.8B surety loans as of June

CEBU, Philippines - Total loans approved by banks covered by the Bangko Sentral ng Pilipinas’ credit surety fund (CSF) totaled to P1.8 billion as of June this year, a board member said.

Monetary Board member Armando L. Suratos said the loans were granted to close to 15,000 micro, small and medium enterprises (MSME) nationwide.

Of the amount, P1.5 billion have already been released to 14,591 MSME beneficiaries, BSP said.

To date the BSP has already established 42 CSFs in the country, Suratos recently told BSP regional stakeholders in Cebu City. 

CSF is a credit enhancement scheme developed by BSP to facilitate bank credit to MSMEs. 

CSFs are created through the pooled cash contributions of cooperatives, state-run banks Land Bank of the Philippines and Development Bank of the Philippines, local government units and DBP-managed Industrial Guarantee and Loan Fund.

The shared funds serve as security cover for loans handed out by banks to MSMEs.

The CSF, through the issuance of a surety agreement, allows cooperatives and small businessmen to get loans from banks even without hard collateral, the central bank said.

The BSP has so far established the CSF program in 30 provinces and 13 cities nationwide since it started in 2008. The Cebu Credit Surety Fund is one of the top performing CSFs in the country.

BANK CREDIT

In a report it released on Wednesday, the Asian Development Bank said that limited access to credit is still a persistent problem for SMEs.

ADB’s Asia SME Finance Monitor 2014 said that SMEs need capital to help them grow and become competitive.

ADB said governments “need to help SMEs become more competitive and able to participate in global value chains.”

The Manila-based lender cited that while the Philippines has mandated bank lending quotas to SMEs, “it needs to further develop credit bureaus, collateral registries and credit guarantees to expand financial outreach.” 

MSMEs account for 99% of registered businesses in the Philippines and employ 62% of total workforce. The sector, however, only accounts for 35.7% of the country’s gross domestic product (GDP). — Carlo S. Lorenciana (FREEMAN)