Guaranteed MSME loans reach P1.47 billion

MANILA, Philippines — Loans of pandemic-hit smaller businesses that have been guaranteed by the government have grown sixfold in March since the guarantee program was launched in December 2020, the Department of Finance (DOF) said yesterday.

In a report to Finance Secretary Carlos Dominguez, Philippine Guarantee Corp (PhilGuarantee) president and CEO Alberto Pascual said guarantees extended to loans of “viable,” but pandemic affected micro, small and medium enterprises (MSME) reached P1.47 billion as of end-March, a 612 percent increase from the P207 billion pilot guarantee portfolio at the launch of the MSME Credit Guarantee Program (MCGP) last December.

Pascual said the number of MSMEs that have availed of guarantees grew by 312 percent to 12,122 enterprises in March from 2,948 businesses as of December.

Improved processing and evaluation parameters starting this year led to the increase in the number of beneficiaries under MCGP, he said.

From the start of the MGCP’s implementation last year, the PhilGuarantee Governing Board chaired by Dominguez approved a total of P37.7 billion in credit guarantee lines to 34 banks.

Majority of the MSMEs covered were from the wholesale and retail sector, which accounted for 67.26 percent of the total at 9,113 MSMEs granted guarantees of P503.5 million.

The second biggest group with guarantee coverage of P58.17 million was the manufacturing sector, which accounted for 7.77 percent at 1,048 MSMEs.

The agriculture sector was the third biggest sector that benefited from the MGCP, with 158 MSMEs assisted through guarantees amounting to P33.91 million, which is 4.53 percent of the loans covered under the program.

In the hotel and restaurant sector, Pascual said 573 MSMEs were assisted with guaranteed loans amounting to P28.45 million, while the personal services sector accounted for guarantees amounting to P31.82 million.

The MGCP grants a 50 percent guarantee for working capital loans and a guarantee of up to 80 percent of the amount for term loans of up to seven years for capital expenditures.

Loans of less than P1 million availed of by MSMEs from thrift banks and rural banks can be guaranteed under the program, but the minimum loan amount is set at P100,000.

“In terms of geographical distribution, all regions of the country received assistance under the MGCP,” Pascual said.

The top three regions assisted in terms of guaranteed loan amounts were CALABARZON (Cavite, Laguna, Batangas, Rizal and Quezon) or Region IV-A with P135.76 million, Central Luzon or Region III with P118.87 million, and the Ilocos provinces or Region I with P65.82 million.

More banks have also submitted applications for guarantees under the program since its launch.