Friday, November 25, 2011

PBSP grants P2B to small businesses

PBSP grants P2B to small businesses
By Angela Celis
Malaya Business Insight
November 25, 2011

The total amount lent out by the Philippine Business for Social Progress to small and medium-sized enterprises (SMEs) has crossed P2 billion, with more than 15,000 borrowers during the past 22 years, according to Rene Fortuno, director for the development finance division.

Fortuno said that the Small and Medium Enterprise Credit (SMEC) program started in 1989, when the United States Agency for International Development (USAID) provided the Philippine government with a fund of P286 million.

The USAID tapped the PBSP to craft the wholesale lending facility program which would assist SMEs. The amount is coursed through the Department of Finance and is being managed by the PBSP.

The P286 million revolving fund is loaned to 23 rural banks and microfinance institutions at 5 percent a year.

The banks and the institutions then lend the fund to small and medium businesses, particularly those in trade, manufacturing, services, and agri-business.

The banks can re-lend at a rate of as high as 10 percent.

He said that for fiscal year October 2010 to September 2011, the PBSP lent out a total of P141.5 million.

Fortuno said the PBSP expects to lend out P200 million for fiscal year October 2011 to September 2012.

The PBSP said that it gets a modest management fee out of the total interest earnings. The majority of the earnings goes to the DOF and is remitted to the Bureau of Treasury.

He also said that the program needs more money to beef up the PBSP’s loan portfolio. He said that the PBSP is in talks with an organization in Luxembourg that could probably provide the fund.