Guarantees to MSME loans up 360%

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    The Philippine Guarantee Corp. (PhilGuarantee) has covered more loans for micro, small and medium enterprises (MSMEs) as of end-February, as it rose by 360 percent from year-end level, the Department of Finance (DOF) said in a statement yesterday.

    The DOF said the amount of loans guaranteed by PhilGuarantee for MSMEs increased to P952.5 million as of end-February, from just P207 million as of December 2020.

    In a report to Finance Secretary Carlos Dominguez, PhilGuarantee also said the number of MSME beneficiaries grew by 200 percent to 8,839 in February 2021, from the 2,948 enterprises that were reported to have availed of its guarantee program as of December 2020.

    “The implementation of improved processing and evaluation parameters starting this year led to this remarkable increase in the number of beneficiaries under the MSME Credit Guarantee Program (MCGP),” Alberto Pascual, PhilGuarantee president and chief executive officer, said.

    The MSME loans guaranteed as of February 28 were from 10 accredited banks and financial institutions.

    From the start of the MGCP’s implementation last year, the PhilGuarantee Governing Board has approved a total of P37.7 billion in credit guarantee facilities to 34 banks. At least 22 banks are now actively submitting MSME loan applications for credit guarantee.

    “The approval of the credit guarantee facilities enabled the availability and accessibility of credit from banks that would have otherwise been reluctant to lend to MSMEs owing to the uncertainties that prevailed with the onset of the COVID-19 pandemic,” Pascual said.

    Under Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan 2), MSMEs account for P2 billion of the P5 billion appropriated for PhilGuarantee to aid pandemic-hit enterprises.

    The Bayanihan 2 allocation allowed PhilGuarantee to further widen its guarantee headroom of economic activities and extend more assistance to viable but severely affected MSMEs, Pascual said.

    In terms of distribution by industry, the bulk of the guaranteed loans for MSMEs as of February 2021 went to enterprises engaged in wholesale and retail (P723 million); followed by manufacturing (P83.6 million); and transport, storage and communication (P65 million).

    For 2021, Pascual said PhilGuarantee is targeting to grow the portfolio of guaranteed MSME loans to P4 billion, and increase the number of beneficiaries by another 8,000 enterprises.

    According to Pascual, the average loan size under the MGCP is less than P1 million, with the minimum loan amount set at P100,000, which can be availed mostly by micro businesses borrowing from thrift banks and rural banks.

    The MGCP grants a 50-percent guarantee for working capital loans and a guarantee of up to 80 percent of the amount for term loans of up to seven years for capital expenditures. – Angela Celis