Central bank eases loan procedures for small business
Philippine Daily Inquirer
First Posted 04:02:00 08/23/2008
Filed Under: Loan Markets, Central Banks
MANILA, Philippines—For the next three years, small-scale enterprises may continue to enjoy simplified procedures when seeking bank loans.
The Monetary Board, the policymaking body of the central bank, Bangko Sentral ng Pilipinas (BSP), approved on Thursday the extension of a policy that relaxes bank lending requirements for small enterprises, particularly the continued waiver of income tax returns (ITRs).
Micro-enterprises—businesses with assets of P3 million or less—are exempt from the ITR requirement. Now the privilege has been expanded to include small-scale enterprises—businesses with assets not exceeding P15 million.
The two-year effectivity of the simplified procedures was scheduled to lapse this year, but the BSP agreed to extend it for three more years.
The transitory nature of the exemption was meant to provide funding leeway for small borrowers.
But the BSP hopes that, eventually, the small businessmen will learn to file their financial statements and ITRs.
It was the Bureau of Internal Revenue that earlier requested the BSP to issue a circular requiring banks to submit the ITR, to boost the government’s efforts to expand the country’s tax base.
However, the waiver of ITR requirement for small-scale industries was among the measures proposed by the Export Development Council for the 2006 national competitiveness summit, which was meant to ease credit flow in the country.
Difficulty in getting credit was among the factors seen to contribute to the country’s poor global ranking in ease of doing business.
Under the International Finance Corp.-World Bank’s annual survey on doing business, access to credit is consistently rated by firms as one of the greatest barriers to operations and growth. Doris C. Dumlao
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