PhilGuarantee hikes MSME guarantee portfolio

Published March 22, 2021, 4:45 PM

by Chino S. Leyco

Loan guarantees for micro, small and medium enterprises (MSMEs) accelerated in the first two-months of the year due to improved processing and evaluation parameters, the state-run Philippine Guarantee Corp. (PhilGuarantee) said.

Alberto Pascual, PhilGuarantee president and chief executive said the amount of loans guaranteed for MSMEs jumped by 360 percent as of February to P952.5 million from P207 million at end-December last year. 

Pascual also said the number of MSME beneficiaries grew by 200 percent from the total of 2,948 enterprises that were reported to have availed of its guarantee program as of December 2020, to 8,839 in February.  

“The implementation of improved processing and evaluation parameters starting this year led to this remarkable increase in the number of beneficiaries under the MSME Credit Guarantee Program (MCGP),” Pascual said in his report to Finance Secretary Carlos G. Dominguez III.

He said that this year, the number of MSME beneficiaries rose from 4,649 in January to 8,839 in February, or a 90-percent increase in just a month’s time. 

The total of P952.5 million in MSME loans guaranteed as of February 28, 2021 were from 10 accredited banks and financial institutions. 

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

At least 22 banks are now actively submitting MSME loan applications for credit guarantee. 

“The approval of the credit guarantee facilities enabled the availability and accessibility of credit from banks that would have otherwise been reluctant to lend to MSMEs  owing to the uncertainties that  prevailed with the onset of the COVID-19 pandemic,” Pascual said. 

Under Republic Act (RA) No. 11494 or the Bayanihan to Recover as One Act (Bayanihan 2),  MSMEs account for P2 billion of the P5 billion appropriated for PhilGuarantee to aid pandemic-hit enterprises. 

The Bayanihan 2 allocation allowed PhilGuarantee to further widen its guarantee headroom of economic activities and extend more assistance to viable but severely affected MSMEs, Pascual said. 

In terms of distribution by industry, the bulk of the guaranteed loans for MSMEs as of February 2021 went to enterprises engaged in wholesale and retail (P723 million); followed by manufacturing (P83.6 million); and transport, storage and communication (P65 million).

For 2021, Pascual said PhilGuarantee is targeting to grow the portfolio of guaranteed  MSME loans to P4 billion, and increase the number of beneficiaries by another 8,000 enterprises. 

According to Pascual, the average loan size under the MGCP is less than P1 million, with the minimum loan amount set at P100,000, which can  be availed mostly by micro businesses borrowing from thrift banks and rural banks.

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.