TO HELP micro, small and medium enterprises (MSMEs) gain access to bank financing, the Philippine Chamber of Commerce and Industry will be putting up a P500-million fund to guarantee loans that these businesses will take out.

In an interview on the sidelines of the 18th Metro Manila Business Conference Friday, PCCI chair Sergio Ortiz-Luis said commercial banks were not keen on lending to MSMEs for fear of defaults.

?The weakness of MSME lending is the inability to secure guarantees. As this is the case, commercial banks don?t want to lend,? he related.

?The government can?t really help that much because of the big amount required for guarantees. Government is also risk averse because of lessons from the past. This is where the private sector can come in,? he added.

Private businesses, he said, could contribute to a guarantee fund for MSMEs, to encourage commercial banks to lend to these small businesses.

The initial P500-million fund that members of PCCI and other private businesses will put together could be used to strengthen the local MSME sector, similar to what Thailand and Malaysia are doing.

?We?ve already identified some willing contributors,? he said, adding that the thrust of the fund was really to help boost the MSME sector. This meant contributions to this fund would have no direct returns for contributing firms.

He revealed that easily P100 million had already been committed by contributors.

While government financial institutions should also contribute to the fund, he said the private sector could still push through with the guarantee scheme, even without counterpart public sector funding.

?We?re going to take risks that are too big for the government to take. If we feel that government welcomes it, we?ll start working on the details. But even if they don?t, we can still work on our own,? he said.

The MSME loan guarantee fund should be in place within the year.