DBP eyes better lending program for MSMEs

MANILA, Philippines - The Development Bank of the Philippines (DBP) will soon be introducing an enhanced lending program for micro and small enterprises.

It will be simplifying documentary and collateral requirements to substantially reduce credit-processing time to 12 working days upon submission of complete documents.

DBP president and chief executive officer Reynaldo G. David said that the loan repayment scheme would be more flexible and convenient, with a possible three-year grace period for projects with a regular gestation period.

Longer grace periods may be accepted based on need, but interests will have to be capitalized during the grace period. The bank likewise plans to liberalize collateral requirements and veer away from the traditional hard collateral prime requirement.

The enhanced retail lending program is intended for start-up or existing micro and small enterprises, with asset size of not more than P15 million, and with loan requirements for over P150,000 but not more than P10 million.

Loans can be used for production, working capital, plant expansion, equipment acquisition, and purchase order/letters of credit financing. Loan amount should be up to 90 percent of project cost.

Eligible enterprises include agri/aqua-marine production, tourism, health and wellness, franchising, food processing, services and support industries, wholesale and retail business. The facility is also aimed at assisting Cavendish banana farmers.

The government financial institution also plans to implement a venture capital program, wherein DBP will invest directly into the equity of an micro, small and medium enterprise (MSME).

This facility is also known as “patient” capital in which DBP infuses equity to the enterprise, providing not only financial muscle but also providing an advantage as a “partner” of DBP.