By Melissa Luz T. Lopez
Senior Reporter
THE CENTRAL BANK is looking to open four new credit surety fund (CSF) facilities this year to improve access to credit for small businesses in the provinces.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said that they are in talks to put up as much as four new CSF cooperatives in the country, which is expected to reach more micro, small and medium-sized enterprises (MSMEs).
The central bank official said the bank is hoping to establish two more CSFs in Mindanao, one within Luzon, and another in the Visayas.
Mr. Guinigundo said a new credit cooperative may be opened within July or August. However, he noted that setting up the facility depends on local government units (LGUs), as they need a local ordinance in order to secure counterpart funding from provincial or municipal level.
The central bank’s CSF program provides alternative collateral for MSMEs by organizing them into cooperatives with pooled funds. CSF units then serve as guarantor for its member businesses and nongovernment organizations as they apply for credit lines from banks, boosting their chances of obtaining loans.
An MSME needs a minimum placement worth P100,000 to the cooperative. In turn, the firm can borrow as much as 10 times the amount which it contributed to the surety fund.
Aside from LGUs, the national government can also contribute seed money to the CSF pools through partner institutions like the Development Bank of the Philippines, Land Bank of the Philippines and the Industrial Guarantee and Loan Fund.
There are currently 51 CSF cooperatives across the country since the program started in 2008, in 32 provinces and 19 cities.
Implementing rules for Republic Act 10744 which made permanent the CSF system also took effect in October 2017, which brought the BSP and the Cooperative Development Authority together in assisting and organizing small firms to become formal entities.
Approved loans via CSF groups hit P4.586 billion as of end-2017, up 41%, according to central bank data.
Mr. Guinigundo said lending to CSF members has surged to “almost P5 billion” as of end May, benefiting over 17,000 small firms.
