State-run Philippine Guarantee Corp. has continued to grow its guarantee program for pandemic-hit micro, small, and medium enterprises (MSMEs) for the third straight month since its launch in December last year, with a total of P1.47 billion in loans guaranteed as of end-March this year.
In his report to Finance Secretary Carlos Dominguez III, PhilGuarantee president and CEO Alberto Pascual said that guaranteed loans represent a 612% increase from the P207 million pilot guarantee portfolio achieved at the launching of the MSME Credit Guarantee Program (MCGP) in December 2020.
PhilGuarante is a state-owned corporation attached to the Department of Finance (DOF).
Its primary objective is to perform its development financing through the provision of credit guarantees in support of trade and investments, exports, infrastructure, energy, tourism, agricultural business/modernization, housing, MSMEs and other priority sectors of the economy.
Pascual told Dominguez the number of MSME beneficiaries grew by 312% to 12,122 enterprises in March 2021 from 2,948 that were reported to have availed of its guarantee program as of December 2020.
The PhilGuarantee chief said that the implementation of improved processing and evaluation parameters starting this year led to the increase in the number of beneficiaries under MCGP.
From the start of the MGCP's implementation last year, the PhilGuarantee Governing Board chaired by Dominguez so far approved a total of P37.7 billion in credit guarantee facilities to 34 banks.
“Majority of the MSMEs covered were from the wholesale and retail sector which accounted for 67.26% of the total, or P503.5 million with 9,113 MSMEs assisted,” Pascual said in his report.
He said the second biggest group with guaranteed coverage was the manufacturing sector, which accounted for 7.77% or P58.17 million with 1,048 assisted MSMEs.
The agriculture sector was the third biggest sector that have benefited from the MGCP, with 158 MSMEs assisted through guarantees amounting to P33.91 million, which is 4.53% of the loans covered so far under this program, he said.
In the severely affected hotel and restaurant sector, Pascual said that 573 MSMEs were assisted with guaranteed loans amounting to P28.45 million, while the personal services sector accounted for guarantees amounting to P31.82 million.
The MGCP grants a 50% guarantee for working capital loans and a guarantee of up to 80% of the amount for term loans of up to seven years for capital expenditures.
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.
“In terms of geographical distribution, all regions of the country had received assistance under the MGCP,” Pascual said.
The top three regions assisted in terms of guaranteed loan amounts were CALABARZON with P135.76 million, Central Luzon with P118.87 million, and the Ilocos provinces or with P65.82 million.
From three active banks since MGCP’s launch in December 2020, Pascual said there are now 14 active banks participating in the MGCP as of March 31, 2021.
“Twelve more banks are expected to start submitting MSMEs for guarantee coverage as their facilities will be operational,” Pascual said.
Under Republic Act (RA) No. 11494 or the Bayanihan to Recover as One Act, MSMEs account for P2 billion of the P5 billion appropriated for PhilGuarantee to aid pandemic-hit enterprises.
“The Bayanihan 2 allocation for PhilGuarantee enabled it to further widen its guaranteed headroom of economic activities and extend more assistance to viable but severely affected MSMEs,” Pascual said.—AOL, GMA News