Lending to MSMEs up 43% to P4.2B in 2010

MANILA, Philippines - State-owned Small Business Corp. (SBC) reported yesterday that lending to micro, small and medium enterprises (MSMEs) increased by 43 percent to P4.2 billion in 2010.

From P2.9 billion loan releases in 2009, SBC lending peaked during the second half of 2010, bringing its total loan funding to MSMEs to P28.9 billion since 2002.

 The agency’s largest portfolio is its wholesale lending worth P1.9 billion which was released to 151 financial institutions.

 SBC has intensified its partnerships in banking sector and has also taken steps in sharing our risk-based lending technology to our partner financial institutions through seminars and trainings,” said Benel P. Lagua, SBC president and chief operating officer.

 Still its best performing lending program is its wholesale microfinance. From P1 billion in 2009, it went up by 53 percent to P1.6 billion in 2010.

 Of this amount, P844 million was released to the country’s 19 poorest provinces through the Rural Micro-Enterprise Promotion Program (RuMEPP), a seven-year rural microfinance program with funding from the International Fund for Agricultural Development (IFAD). RuMMEP complements the government’s programs for poverty alleviation by providing sound credit delivery matched with business development services.

 The MSME retail lending also recovered in 2010 after a slight slump in 2009. Working capital and fixed asset financing increased by 41 percent reaching a total of P506 million compared to just 359.9 million in 2009.

 “With 102 new accounts for 2010, under a risk-based lending approach, SB Corp. has once again proven that adopting a risk based approach as opposed to traditional collateral based lending, has helped us maintain a reasonable default rate and a good earning portfolio without compromising our mandate of lending to non-bankables,” Lagua added.