SMALL farmers in the countryside can now have more access to bank credits after the Bangko Sentral ng Pilipinas (BSP) approved the micro-agri loan.

In its website, the BSP said borrowers of the micro-agri loans will enjoy the same benefits as microfinance loans, such as the exemption from the requirement of traditional collateral, complex documentary requirements and application procedures.

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Micro-agri loans are in amounts not exceeding P150,000, and involve a short loan term and frequent amortizations based on the borrower’s capacity to pay as determined through household cash flow analysis. They are typically unsecured, or secured with non-traditional collateral substitutes like group guarantee or household/personal assets.

These loans are granted to borrowers who have engaged in farming for at least two years but have other sources of non-farm income. Considering the seasonality and cycles of agricultural production, micro-agri loans, the BSP said, will provide flexibility in terms of payment.

To ensure that micro-agri loans are delivered to clients in a prudent and sustainable manner, the BSP said banks must have the capacity, technical capability and appropriate risk management mechanisms in place to provide this product. The bank must also have a good track record in microfinance, among others.

The application of microfinance principles to agricultural credit is a pilot project of the Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) that was approved by the Monetary Board on Jan. 19, 2006.

A total of 16,898 borrowers have benefited from micro-agri loan disbursements amounting to P487 million since the project’s inception in 2006 up to October last year. This project was participated in by the 16 RBAP-MABS banks.