DAVAO CITY—Government has guaranteed by as much as P2.01 billion the total aggregate loans from banks of micro, small and medium enterprises (MSMEs) as of June this year, according to Philippine Guarantee Corp. (PhilGuarantee).
The PhilGuarantee has been the designated agency to ensure the guarantee provision that would assure banks and other lenders of guaranteed payment of the loans by small businesses.
PhilGuarantee President and CEO Alberto E. Pascual said their MSME Credit Guarantee program (MCGP) grants 50 percent guarantee on working capital loans and the cumulative loan approvals over the January-to-June 2021 period has reached P2.01 billion.
The state-owned firm said the guaranteed loans allowed “almost 10,000 Covid-19 pandemic-hit enterprises to continue their operations and retain jobs.”
“The PhilGuarantee will guarantee or cover about P1 billion of this amount in the event that borrowers default,” Pascual said.
He noted the continued support received by MSMEs from banks.
“While guarantees reached P1 billion in approvals, it is worthwhile to note that the outstanding balance of P897 million reflected as of June 30 is net of loans guaranteed, but already paid,” Pascual said.
Under the MGCP, PhilGuarantee also extends guarantees of up to 80 percent of the amount for term loans of up to seven years for capital expenditures. The firm said in a report to the Department of Finance that guaranteed loans of P2.01 billion represent an 866-percent increase from the P207 million pilot guarantee portfolio achieved at the launching of the MCGP in December 2020.
From only three banks participating in the MCGP at its launching, Pascual said that the number went up to 19 lending partners, which include two universal banks, six thrift banks and 11 rural banks.
“The participating banks have sustained their lending activities. A total of 9,180 SMEs (small and medium enterprises) in the essential wholesale and retail trade sector (agricultural products distribution, medical support and medicine distribution) were granted additional working capital for their businesses,” Pascual said.
He said manufacturing sector covering 1,332 SMEs, “which is a critical industry to immediately generate jobs,” were the second biggest sector supported by the guarantees.
From the start of the MGCP’s implementation last year, the PhilGuarantee Governing Board approved a total of P37.7 billion in credit guarantee facilities to 34 banks.
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.