Banks lending to SMEs to get generous perks

The Bangko Sentral ng Pilipinas (BSP) will issue a circular implementing the provisions of the baranggay micro business enterprises law, giving banks that lend to small enterprises generous incentives.

BSP Deputy Governor Alberto Reyes said the law was one of the most significant pieces of legislation to emerge from Congress, giving banks unprecedented incentives to entice them to lend to businesses with assets of up to P3 million.

Reyes said the BSP has concluded its discussions with the Department of Trade and Industry, the primary implementing agency for the Barangay Micro Business Enterprises Act of 2002 known as the BMBE Law.

Under the law, all BMBEs are exempted from income taxes arising from operations and local government units were also encouraged to exempt them from local taxes, fees and charges.

"The BSP is primarily responsible for the implementation of Section 9 on Credit Delivery," Reyes explained.

Under the law, Reyes said banks that lend to BMBEs could claim 200 percent compliance with the Agri Agra Law which requires banks to set aside a portion of their loan portfolio for agriculture and agrarian reform.

"If they lend to BMBEs, they can claim up to 200 percent of the loan value as compliance with the Agri Agra Law," Reyes explained, Banks lending adding that this privilege was also extended to government financial institutions which were allowed to claim up to 100 percent of the loan value.

Reyes said the compliance claim was also extended to Republic Act 6977 known as the Magna Carta for Small and Medium Enterprises which also required banks to set aside another portion of their loan portfolio for lending to SMEs.

According to Reyes, banks could also split the one-time use of their BMBE loans as compliance for both the Agri Agra Law and the SME Law. „They can claim 100 percent of the loan value as compliance with the Agri Agra Law and then 100 percent compliance with the SME Law for a total of 200 percent,‰ he explained.

Furthermore, he said banks that lend to BMBEs were also exempted from the bank branching moratorium if they planned to cater exclusively to BMBEs. „They can open as many branches as they would require to do this business, depending on their capital adequacy ratio,‰ Reyes said.

Reyes said BMBE loans are also covered by various government guarantee facilities.

Under the law, the government also created a P300-million BMBE Development Fund to be funded by the Philippine Amusement and Gaming Corp. (Pagcor).