STATE-RUN Philippine Guarantee Corporation (PhilGuarantee) approved a total of P41.66 billion in micro, small, and medium (MSME) credit guarantees to 47 banks or financial institutions since the pandemic hit the country in March last year.
In a statement, PhilGuarantee said it has so far issued combined total credit guarantees for MSMEs, housing, and agriculture sectors amounting to P195 billion. This has benefitted more than a quarter of a million program beneficiaries—micro, small and medium entrepreneurs, low-cost/socialized homebuyers, and farmers and fisher-folks.
PhilGuarantee opened last year a credit guarantee facility to support MSMEs facing financial difficulties due to the Covid-19 pandemic.
The MSME Credit Guarantee Program (MCGP) 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.
The average loan size under the MCGP is less than P1 million, with the minimum loan amount set at P100,000, which can be availed of mostly by micro-businesses borrowing from thrift banks and rural banks.
Meanwhile, the Housing Guarantee Group has approved a total of P81.87 billion in credit guarantee facilities to 13 banks, real estate developers and other financial institutions.
PhilGuarantee’s total outstanding credit guarantees issued for housing reached P187 billion as of October 30 this year.
“This has made housing more affordable to the corresponding 140,250 buyers/borrowers of residential units, more than 81 percent of which belong to the microfinance, socialized and low-cost income sectors,” it said.
As of November 30 this year, a total of P5.76-billion guarantee lines have been approved with 49 partner-lending institutions, with guaranteed loans amounting to P5.10 billion for the agriculture sector.
Serving as an economic tool, credit guarantees provide the means to encourage private banks to continue lending to priority sectors and essential industries while improving capital adequacy ratio, reduce intermediation costs, and achieve broader outcomes for socio-economic impact while ensuring effective risk management.
