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PhilGuarantee-backed MSME loans surge in first two months

THE Philippine Guarantee Corp. (PhilGuarantee) guaranteed P952.5 million worth of loans for micro, small and medium enterprises (MSMEs) in the first two months of 2021, against the P207 million total at the end of 2020, after the company streamlined its application process.

The number of MSMEs who had their loans guaranteed rose to 8,839 at the end of February from 2,948 at the end of 2020, the Department of Finance said in a statement Monday, citing a report from PhilGuarantee.

“The implementation of improved processing and evaluation parameters starting this year led to this remarkable increase in the number of beneficiaries under the MSME Credit Guarantee Program,” PhilGuarantee President and CEO Alberto E. Pascual was quoted as saying.

Month on month, MSMEs with approved guarantee applications rose 90%, he said.

The loans receiving guarantees were originated by 10 accredited banks and financial institutions.

The governing board of PhilGuarantee, chaired by Finance Secretary Carlos G. Dominguez III, has approved credit guarantee facilities worth P37.7 billion to 34 banks since the program started last year.

Some 22 banks are currently applying for the MSME loan guarantee program.

“The approval of the credit guarantee facilities enabled the availability and accessibility of credit from banks that would have otherwise been reluctant to lend to MSMEs owing to the uncertainties that prevailed with the onset of the COVID-19 pandemic,” Mr. Pascual said.

The top industries that benefited from the program were wholesale and retail sectors receiving P723 million in guarantee loan cover, or 76% of the total. Other leading sectors were manufacturing (P83.6 million or 8.78% of the total); and transport, storage and communication (P65 million or 6.8%).

PhilGuarantee is implementing the government’s P120-billion MSME credit guarantee program, a scheme meant to help the hard-hit sector bounce back from the economic downturn.

The program hopes to encourage lending by banks by helping them overcome their risk aversion in lending to MSMEs.

Mr. Pascual said the target is to increase the MSME guarantee loan portfolio to P4 billion and grow the number of beneficiaries to 8,000 companies by year’s end.

The loans applied for guarantees average P1 million, with some as low as P100,000.

The government injected an additional P5 billion into PhilGuarantee, which it will use to guarantee loans of larger companies requiring up to P300 million in loan cover.

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. — Beatrice M. Laforga

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