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Wednesday, August 06, 2003
Cida, Network Bank tie up for non-collateral credit
By Christie Enriquez- Uayan
IF AN enterprise's loan proposal is rejected by a bank for insufficient collateral, the owner may go to Network Bank to avail of a non collateralized credit facility, Department of Trade and Industry (DTI) Regional Director Merly Cruz said Monday.
Cruz, who was the Kapehan sa Dabaw guest, told reporters that small and medium enterprises (SMEs) in the region, may avail of the credit program offered by the bank in collaboration with the Canadian International Development Agency (Cida).
Dubbed as the Bridge financing, the program focuses on industries that are market driven, Cruz said.
In lieu of collaterals, purchase orders issued by companies acting as buyers of the borrowers' products may be presented.
Contracts signed by exporters and SME-borrowers may also be used to avail of the loan.
The program, which started about three years ago, had P4 million as start up capital for SME credit, half of the amount was allotted to the Davao region while the rest went to South Cotabato, Sarangani, and General Santos areas.
What started out as P2 million-loan portfolio in the region increased to P2.8 million within two years since its implementation.
The success of the program resulted Network Bank's offer to become the conduit of the non-collateralized re-lending project. Cida infused an additional P6 million for this year, Cruz mentioned.
To facilitate the swift approval of loan applications, Cruz said an in house staff trained by the project implementers is deployed to assist the applicants.
Some government financial institutions (GFIs) are being criticized by SME owners for being too strict with the imposition of collaterals.
They claim that in some instances, GFIs refuse loan applications because of insufficient collateral value submitted by traders.
Under the SME Unified Lending for National Growth (Sulong program, GFIs and banks are not supposed to refuse the application of SMEs because of inadequate collateral.
Cruz, however, explained that the government cannot enforce the mandate as banks and GFIs have the responsibility to protect the interest of its depositors whose money is used to partly finance the loan.
(August 6, 2003 issue)
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