LANDBANK offers 90% MSME project financing

Published February 3, 2021, 11:49 AM

by Madelaine B. Miraflor

Land Bank of the Philippines (LANDBANK) has opened a new credit facility that will fund 90 percent of borrowers’ investment requirement, but this is only if the borrower is either a farmer or a micro, small, and medium enterprise (MSME) engaged in the agricultural value chain of certain commodities. 

On Wednesday, LANDBANK announced that it launched the Rural Agro-enterprise Partnership for Inclusive Development and Growth or RAPID Growth Credit Facility, which will provide funding to small farmers and MSMEs engaged in the agricultural value chains of cacao, coffee, coconut, and processed fruits and nuts.

This facility, according to the state-run bank, will help stimulate business growth and sustainably increase the income of small farmers, as well as provide employment opportunities to unemployed individuals in selected provinces in Region 8 and Mindanao.

Such a program is in support of the RAPID Growth Project implemented by the Department of Trade and Industry (DTI) and funded by the International Fund for Agricultural Development (IFAD). 

LANDBANK will manage the credit facility in partnership with DTI, which will endorse beneficiaries qualified to borrow under the facility that include cooperatives, farmers’ associations and organizations, Non-Governmental Organizations (NGOs), and MSMEs.  

Borrowers may avail up to 90 percent of their project cost, net of matching grant from the DTI, with a fixed interest rate of 5 percent per annum for the first three years to finance the costs of production inputs, machinery, facility, and equipment.

Eligible projects include the production of cacao, coconut, coffee, and processed fruits and nuts, including the development of new plantation, replanting, rejuvenation, rehabilitation of old trees; establishment of nursery gardens; post-harvest activities such as fermentation and drying; processing or manufacturing such as roasting, grinding or milling, packaging and storing; and trading.

Loans for production are payable based on crop cycle or gestation and payback period of the project.

Meanwhile, loans for fixed asset acquisition are payable based on project cash flow but not more than the economic useful life of fixed assets or remaining useful life for secondhand or refurbished machines.

Finally, loans for permanent working capital and working capital are payable up to three years and one year, respectively.

In 2020, a total of 2.67 million farmers and fishers nationwide borrowed from LANDBANK.

LANDBANK’s agricultural loans also grew from P236.31 billion in 2019 to P237.62 billion in 2020, more than half of which were given to MSMEs and large agribusinesses.

Of the P237.62 billion total outstanding loans, small, medium, and large agribusiness enterprises were granted P142.75 billion, while P50.89 billion was channeled to support agri-aqua related projects of local government units (LGUs) and government-owned and controlled corporations (GOCCs).

P43.98 billion then went to small farmers and fishers, cooperatives and farmers’ associations, rural financial institutions, and other conduits.

LANDBANK assisted farmers and fishers through its regular loan offerings and lending programs jointly implemented with the Department of Agriculture and the Department of Agrarian Reform.