USAid project to help give MSME access to loans-A A +A
Tuesday, October 8, 2013
SMALL and medium enterprises (SMEs) planning to expand their business can look forward to a new assistance to facilitate their credit access.
The United States Agency for International Development (USAid) with the Philippine government recently launched a new Advancing Philippine Competitiveness (Compete) project that includes a component to help increase SME access to loans.
Dr. Mario Lamberte, component 3 team leader of Compete project, said beneficiaries are companies engaged in construction, energy, healthcare, manufacturing, post-harvest agricultural processing and agribusiness, and tourism sectors.
Lamberte said financial institutions now are highly liquid but credit is not flowing to SMEs in key sectors because of their weak borrowing capacity.
"We try to reduce if not completely tear down that Berlin Wall that separates banks from SMEs so that liquidity can flow to the SMEs," he said during the recent general membership meeting of Philippine Exporters Confederation Inc. (Philexport).
Lamberte said COMPETE project addresses credit constraints for SMEs particularly problem of inadequate collateral and developing a winning business proposal that is acceptable to loan application.
"So we come up with a land titling activity and the (credit guarantee) mechanisms to address the issue on collateral. The other one is establishing an efficient credit information system," he said.
Lamberte said they are in talks with donor agencies who are interested in setting up credit guarantee schemes for SMEs which will be coursed through directly to partner banks.
He identified these partner banks as Bank of the Philippine Islands (BPI) Savings Bank and BPI Family Savings Bank.
"And next month, we are going to add four more partner banks...So we have target loan portfolio and we monitor the utilization of that loan portfolio," he added.
Lamberte said project also provides technical assistance and training meant to increase the borrowing capacities of SMEs through improvement in business management, including financial literacy.
"Many of them (firms) don't like to scale up or expand operation because expanding requires financing. And they don't like to approach banks because banks have been looking for something that they can't handle, including financial plan. (The project) addresses these weaknesses," he said.
Lamberte pointed out that Compete assists companies not only to expand their operations and increase investments.
"Most importantly, they are able to employ people. We want to look at investments and employment in this case," he stressed.
Moreover, Lamberte said COMPETE also aims to promote increased trade and investment through better provision of infrastructure (component 1); and increased competitiveness of key industries -- tourism, agriculture and manufacturing (component 2).
The USAID-assisted project is part of the US-Philippines Partnership for Growth (PFG) that helps the Philippines achieve a higher, sustained and more inclusive growth trajectory at par with other high performing emerging economies. (PR)
Published in the Sun.Star Cagayan de Oro newspaper on October 08, 2013.