Philguarantee boosts fund facility to P300 billion

MANILA, Philippines — State-run Philippine Guarantee Corp. (Philguarantee) beefed up its facility to P300 billion to cover guarantee programs particularly for micro, small and medium enterprises (MSMEs), small farmers and fisherfolks and other borrowers severely affected by the global health pandemic.

“There’s enough guarantee capacity as of now, so those who don’t have lines with us can still apply,” said Philguarantee president Alberto Pascual.

The principal agency for state guarantee finance in the country has encouraged members of the Chamber of Thrift Banks (CTB) to tap the credit guarantee facility particularly for their agriculture, housing, and MSMEs loans.

“Philguarantee’s credit guarantee benefits thrift banks as a credit enhancer and a credit risk mitigant,” Pascual said.

The benefits include sovereign guarantee, zero credit risk weight, exemption from the one percent general loan loss provisioning, exemption from BSP regulatory limits, and tax-exempt interest income for housing credit guarantee.

Philguarantee is tasked to perform its development financing role through the provision of credit guarantees in support of trade and investments, exports, infrastructure, energy, tourism, agricultural business, housing, MSMEs and other priority sectors of the economy.

It has launched a special program called the MSME Credit Guarantee Program (MCGP) in response to the plight of the MSMEs affected by the ECQ due to the coronavirus disease 2019 or COVID-19 pandemic.

The program with a maximum loan amount of P50 million per borrower aims to increase availability of credit from the banking sector and at the same time provide means to jumpstart MSMEs with much-needed working capital.

Guarantee limit or coverage under the MGCP is 50 percent of the principal amount of loan, with guarantee fee rate of one percent for guarantees approved until December.

Pascual said the agency is looking at extending the coverage up to next year.

“It is not coterminous with the general community quarantine or the end of the quarantine. It is up to us whether to extend it,” Pascual said.

Philguarantee approved a total of P37.5 billion in credit guarantee facilities for 22 accredited banks as of end June in line with its key assistance role of encouraging the banking sector to continue lending to MSMEs amid the pandemic.

It continues to process accreditation of more banks to have broader channels of credit support to MSMEs. It signed separate agreements with six banks providing MSME loans.

A total of P10.2 billion of the loans to MSMEs will be coursed through Ayala-led Bank of the Philippine Islands and BPI Direct BanKo, Aboitiz-owned Union Bank of the Philippines, Malayan Bank, New Rural Bank of San Leonardo, and the Bangko Kabayan providing cushion to small businesses.