Small entrepreneurs to get ample aid from rural banks

CEBU, Philippines - Financial assistance to small entrepreneurs, farmers and fisherfolks is seen to accelerate starting this year, as the Rural Bankers Association of the Philippines (RBAP) favors the new Microenterprise Access to Banking Services (MABS) program of the Bangko Sentral Ng Pilipinas (BSP).

RBAP president Joseph Omar Andaya said that the industry anticipates that more rural banks will be encouraged to offer micro-finance products, especially to the agricultural sector with the MABS program.

The RBAP-MABS program provides technical assistance and training to develop rural banks’ capacity to profitably offer microfinance products and services for microentrepreneurs, small farmers and low-income households.

According to Andaya this program recently implemented by the BSP would allow more farmers and micro-finance customers to gain financial access from rural banks in their respective towns and communities.

While RBAP-MABS does not provide loan funds or guarantees, it supports savings mobilization and commercial sources of capital and investment to finance and support sustainable microfinance services.

Borrowers of the micro-agri loans will enjoy the same benefits as microfinance loans, such as the exemption from the requirement of traditional collateral, complex documentary requirements and application procedures.

Micro-agri loans are in amounts not exceeding P150,000, and involves a short loan term and frequent amortizations based on the borrower’s capacity to pay as determined through household cash flow analysis, BSP explained.

The loans are granted to borrowers who have engaged in farming for at least two years but have other non-farm income sources, Andaya said.

The application of microfinance principles to agricultural credit is a pilot project of the RBAP-MABS approved by the BSP Monetary Board on January 19, 2006.

Since late 2004, when the RBAP-MABS Approach to micro agri-lending was first pilot tested and offered to MABS participating rural banks, where more than P500 million in micro agri- loans were disbursed to more than 17,000 farmers.

The RBAP-MABS program is open to all 650 member rural banks and with the support of its service providers, plans to open up and offer additional training to interested and qualified rural banks in 2010 to expand micro agricultural and other microfinance products and services.

Earlier, BSP director for Department of Economic Statistics Rosabel Guerrero said that BSP has also opened the “Credit Security Fund” program in October last year, thus availability of credit for micro to Small and Medium Entrepreneurs (SMEs) has now expanded.

“We further relaxed the loan application requirement in order to open credit [especially for micro and SMEs],” Guerrero said in an interview.