Gov’t OK sought for proposed MSME loan fund

LOCAL exporters hope to secure the government’s nod for the proposed allocation of P20 billion for an emergency loan fund, which is expected to help build the capacities and boost the competitiveness of micro, small, and medium sized enterprises (MSMEs).

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc.(Philexport), said the funding, which can be administered by state run SB Corp, could come from the P62.7-billion Conditional Cash Transfer (CCT) budget which might not be fully utilized until June 2016.

Ortiz-Luis said the proposed emergency loan fund was expected to increase by 10 to 15 percent the number of jobs that might be created and the number of MSMEs that would be able to secure that much needed access to finance. The lack of such access has long been identified as one of the biggest constraints faced by many MSMEs in the country today.

The Philexport chief issued the call, following the institutionalization of the Credit Surety Fund program of the Bangko Sentral ng Pilipinas.

Republic Act 10744, which mandates the creation of local cooperatives to administer credit surety funds (CSF) to improve the accessibility of MSMEs, cooperatives, and non-government organizations (NGOs) to the credit facility of banks, lapsed into law early this month.

Exporters welcomed the said law as this was expected to help improve MSMEs’ access to bank credit. It also provides alternative funding source for small businesses.

According to Philexport, RA 10744 provides for the creation of local government units-partnered cooperatives to manage the CSF. Such funds will serve as security for the loans that will be obtained by qualified borrowers from lending banks by way of a surety cover issued by the board of directors of the CSF cooperative, in lieu of collateral.

The CSF is designed to provide MSMEs, cooperative and nongovernment organizations (NGOs) with more inclusive access to bank credit, thereby enhancing their sustainability and growth.

MSMEs currently account for 99.6 percent of total establishments in the country and account for 61.2 percent of the country’s total employment and 35.7 percent of total value added.