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PhilGuarantee opens P42.3 billion credit window for small firms

By Mary Grace Padin – November 13, 2020 (The Philippine Star)

MANILA, Philippines — State-run Philippine Guarantee Corp. (PhilGuarantee) has opened P42.3 billion in credit guarantee facilities to support micro, small and medium enterprises (MSMEs) struggling due to the coronavirus pandemic, the Department of Finance (DOF) said yesterday.

Citing a report of PhilGuarantee president and chief executive officer Alberto Pascual, the DOF said banks are now extending more loans to MSMEs following the launch of the agency’s credit guarantee program.

“We are now processing thousands of MSME loan guarantee applications. We expect availments to reach P3.6 billion up to yearend with about 6,000 borrowers and about P20 billion toward the end of next year covering about 40,000 MSMEs,” Pascual said.
According to Pascual, 50 percent of PhilGuarantee’s multibillion-peso loan facility for MSMEs is guaranteed, higher than the 30 percent guarantee offered by Thailand.

“Just like in Thailand, the freed-up reserves or extra liquidity of banks were not used to lend to MSMEs. But now we are seeing banks becoming active again and some in fact have been pre-clearing with us bigger loans for new projects,” Pascual said.

The DOF said PhilGuarantee has so far accredited eight universal banks, one commercial bank, six thrift banks and 10 rural banks for its MSME guarantee program.

It is also processing the application of 16 other banks to further expand the reach of the program.

“This is the first time PhilGuarantee is providing guarantee coverage for MSMEs,” Pascual said.

Pascual said the average loan size under the guarantee program is less than P1 million, with the minimum loan amount set at P100,000. The maximum loan amount that can be guaranteed is P50 million, with a guarantee fee of one percent per annum.

Working capital loans have a term of one year to five years with 50 percent guarantee, while term loans are payable in up to seven years with the guarantee covering up to 80 percent of the loan amount.