By Mai Gevera
Two provinces in Mindanao, the Davao del Norte and Compostela Valley Province, are the first to avail of the latest financial window of Bangko Sentral ng Pilipinas (BSP) known as Credit Surety Fund.
BSP Governor Amando Tetangco Jr. attended the launching of the Davao del Norte Credit Surety Fund and Compostela Valley Koopnegosyo Surety Fund along with Governors Rodolfo del Rosario and Arthur Uy.
“This is the government’s pro-active approach to support our cooperatives by helping our micro, small, and medium entrepreneurs,” Tetangco said.
He stressed that this fund is the answer to the common problem of most micro entrepreneurs who could hardly get a loan in financial institutions due to lack of collateral, unstable income, lack of business experience, and low paying capacity.
It is believed that the MSMEs and their goals of developing and expanding their business are usually hampered by these problems.
Through President Gloria Macapagal-Arroyo who signed Republic Act 9501 or the Magna Carta for MSMEs, the BSP has now opened the Credit Surety Fund, a fund generated from contributions by well-capitalized cooperatives, the provincial government and other donors like banks.
Cooperatives which have a minimum capital-to-assets ratio of 30% or a capital-to-risk asset of 12% or higher can avail this program.
Tetangco explained that this program gives MSME’s access to credit from banks even without collateral by way of a surety cover issued jointly by the parties.
Cooperatives, on their part, benefit from this as they provide their members of good standing access to formal sources of credit and they also derive additional income from surety fees. Banks, too, find this program beneficial as credit risks associated with extending loans to MSMEs are mitigated. While local government units benefit by way of higher tax revenues arising from increased economic activities.