Loans approved under a public-private credit program for micro, small and medium enterprises (MSMEs) reached P2.28 billion as of last year, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.
A total of P2.28 billion has been lent out in the past seven years under the Credit Surety Fund (CSF) initiative, the central bank said, benefiting 15,248 micro, small and medium enterprises (MSMEs) nationwide.
In a related development, the central bank said it is pleased with the enactment into law of the CSF Cooperative Act of 2015 on February 6 this year, promising an enhanced financial landscape for Filipino entrepreneurs.
The new law institutionalizes the CSF Program initiated by the BSP in 2008 to help unbankable MSMEs gain access to formal sources of credit.
A form of financial inclusion for MSMEs, the central bank said the program effectively increases their bank ability and creditworthiness by serving as substitute to hard collaterals for capital-short entrepreneurs experiencing difficulty in obtaining loans from banks due to lack of acceptable collaterals, credit knowledge and credit track record.
A major component of the CSF is the Capability Enhancement Program (CEP) for member-cooperatives aimed at developing skills in financial, risk and business management and entrepreneurship. The CEP also inculcates in member-cooperatives core values in good governance.
The BSP stressed that the law now provides juridical personality to the CSF and will be registered, along with existing CSFs, as a CSF Cooperative with the Cooperative Development Authority (CDA).
The CDA will be responsible for the regulation and supervision of these cooperatives, it said.
“The BSP will continue to spearhead the promotion and organizational development of CSF Cooperatives and facilitate the acquisition by CSF Cooperatives of technical assistance such as training and seminars and other forms of technical assistance,” it added.
The CSF is a fund generated by the pooling of contributions of well-capitalized and well-managed cooperatives and nongovernment organizations (NGOs), local governments and partner institutions such as the industrial Guarantee and Loan Fund, Development Bank of the Philippines, and Land Bank of the Philippines.
As of end-2015, aggregate pledged contributions of stakeholders have reached P713.2 million, the BSP reported.
MSMEs that obtain loans through the CSF benefit from lower interest rates compared with those charged by private lenders or loan sharks.
The CSF program also provides training to enhance the capabilities of participating cooperatives and MSMEs in the areas of financial and risk management, entrepreneurship and business management, and credit appraisal and monitoring.
Since 2008, CSFs have been established in 45 local governments nationwide–24 in Luzon, seven in Visayas and 14 in Mindanao–comprising 630 cooperatives and 13 NGOs.