by Noel Baguio
IT’S going to be a big day for small entrepreneurs.
Micro, small and medium-sized enterprises (MSMEs) in Davao del Norte will soon be able to access bank loans even if they don’t have collaterals with the coming launch of the Credit Surety Fund (CSF) program to the province.
Developed by the Bangko Sentral ng Pilipinas (BSP), the CSF is a fund generated from contributions of well-capitalized and well-managed cooperatives with counterpart contributions from the provincial government and the national government’s Industrial Guaranty and Loan Fund (IGLF) equivalent to the amount raised by the coops.
The BSP, in coordination with the provincial government, will launch the DavNor Coopreneurs Credit Surety Fund program on July 31, 2009 at the Central Bank Building in Davao City. Simultaneously, the CSF program for Compostela Valley province will also be launched at the same event.
Monetary Board chair and BSP governor Amando Tetangco Jr., Davao del Norte Gov. Rodolfo del Rosario and Comval Gov. Arturo Uy will lead the signing ceremonies.
They will be joined by Monetary Board members Ignacio Bunye and Juanita Amatong, together with the CSF oversight committee chairs of the two provinces.
Gov. Del Rosario said he is ready to put up more than P5 million as counterpart of the province to the amount local cooperatives may raise for the fund.
The governor cited the fund as an important milestone for both cooperatives and MSMEs, since it opens up a new avenue towards increasing credit flows for financing their own needs.
The Provincial Cooperative Development Division, headed by Engr. Humber Cabunoc, is expecting the developed cooperatives in the province to raise P5 million to jumpstart the program this year.
Republic Act 9501 mandatea banks and lending institutions to allocate eight percent of their loan portfolio to micro and small enterprises, and two percent to medium enterprises.
However, the small entrepreneurs continue to find it difficult to avail of loans from these institutions because of lack of acceptable collaterals, unstable income or cash flows, and low paying capacity, among other factors.
The BSP developed the CSF as a better alternative in order to avoid the MSMEs being perpetually victimized by unconscionable usurers and loan sharks whose schemes do not support the growth of the sector.
The fund addresses the need of MSMEs, which comprise 90 percent of local firms, for more capital by enhancing their creditworthiness and mitigating the credit risk of financial institutions extending credit to the sector.
Banks that will extend loans secured by the CSF can rediscount up to 80% of such loans with the BSP.
As designed, the surety fund is to be managed and administered by an Oversight Committee at the provincial level to make it more responsive to the credit needs of MSMEs in each province.
