$40-M ADB loan sought to finance SME projects

The Small Business Guarantee and Finance Corp. (SB Corp.) is planning to tap the Asian Development Bank (ADB) for a $40- million loan to finance the projects of small and medium enterprises (SMEs).

Of the $40 million loan, some $25 million will be used for wholesale lending to banks and onlending to domestic SME borrowers while the $15 million will be provided to TIDCORP’s (PHILEXIM) onlending to SME exporters.

At present, SB Corp. has authorized capital stock of P5 billion. Its commercial operation started on July 16, 1992 with an initial paid-up capital of P198.78 million.

As mandated by the Magna Carta for SMEs (Republic Act 6977 as amended by RA 8289), SB Corp. provides financing for SMEs through its wholesale loans, credit guarantees and direct loans to SMEs.

With the institution’s drive to continually improve the services being provided to the SMEs, the corporation is currently engaged in exploring, sourcing additional funding from local and international funders.

From 1993 to present, cumulative availments are more than P10 billion. These are short-term borrowings of the corporation with an average term of 180 to 360 days.

In 1993, total loan approvals amounted to P2.3 billion, inclusive of guarantees. This showed a 48 percent increase from 2002 approvals of P1.2 billion.

For 2004, total lines granted under the wholesale lending facilities alone amounted to P2.012 billion.

SB Corp.’s wholesale loans are intended for bankable SMEs. These are conduited through banks specifically for lending to already bankable SMEs.

SMEs make up the bulk or about 99.6 percent of the total registered Philippine companies. These enterprises also contribute about 32 percent of the country’s total gross domestic product.

In relation to this, the corporation has recently asked the National Credit Council (NCC) led by the Department of Finance (DOF) to review and approve the final report on the project loan.