End-March state-backed loans to MSMEs surge by sevenfold

GUARANTEED LOANS to small businesses climbed as of March as Philguarantee Corp. received more funds, the Finance department said. — BW FILE PHOTO

STATE-RUN Philippine Guarantee Corp. (Philguarantee) saw its guaranteed loans to micro, small and medium enterprises (MSMEs) surge by sevenfold as of March from the end-2020 level after receiving the P5 billion in additional funds from the government’s second stimulus package.

The Department of Finance (DoF) reported on Wednesday that Philguarantee’s overall guaranteed loans to MSMEs jumped by 612% to P1.47 billion as of March from P207 million in December 2020. The statement quoted a report from the state-run firm’s president and CEO Alberto E. Pascual.

The number of small businesses that availed of the MSME credit guarantee program (MCGP) also spiked by 312% to 12,122 as of March from 2,948 at end-2020.

Mr. Pascual said improved processing and evaluation processes helped boost the number of businesses that availed the program.

Most of the beneficiaries were from wholesale and retail sectors, according to Mr. Pascual, with P503.5 million in total guarantee loans extended to 9,113 of these enterprises.

This was followed by the agriculture sector, where 158 MSMEs were able to take out P33.91 million in government-backed loans; the hotel and restaurant sector, with 573 firms receiving P28.45 million in credit guarantees; and the personal services sector with a combined P31.82 million in guarantees.

Philguarantee is implementing the government’s P120-billion MCGP meant to help the sector recover from the coronavirus pandemic’s impact by encouraging banks to lend more.

Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II) infused additional capital of P5 billion into the state-run firm to expand the program, P2 billion of which was alloted for MSMEs and the rest for guarantee loans of bigger companies requiring up to P300 million in credit cover.

The Budget department released the additional capital on Feb. 8.

In terms of location, Mr. Pascual said borrowers from all regions were able to tap the facility, with the biggest guaranteed loans going to borrowers from the Calabarzon Region (P135.76 million), Central Luzon (P118.87 million), and the Ilocos Region (P65.82 million).

Around P37.7 billion in loan guarantee facilities have been approved so far for 34 banks since last year. The number of banks actively participating in the program also grew to 14 banks at end-March from just three as of 2020.

Mr. Pascual said 12 more financial institutions are scheduled to submit their lists of businesses eligible for guarantee coverage.

The MSME credit guarantee scheme covers loans worth P100,000 to P1 million availed by micro firms from thrift banks and rural banks. The program provides 50% guarantee cover for working capital loans and up to 80% for term loans of up to seven years for use in capital expenditure projects. — B.M. Laforga