Council to discuss loan facility for contractors

The City Council has scheduled an executive session to discuss the implementation of “Cebu City Suppliers Lending Facility” after some opposition councilors raised several concerns on the proposal of Councilor Sisinio Andales.

Councilor Raymond Alvin Garcia said there is a need for the council to look into the proposed resolution to ensure that it is advantageous to the city government.

Garcia said an Ad Hoc committee should be formed to check on the resolution before the City Council will act on it. Councilor Margarita “Margot” Osmeña, however, preferred an executive session.

Representatives of the Development Bank of the Philippines, City Treasurer’s Office, City Accountant, Bids and Awards Committee and Executive Assistant to the mayor Francisco “Bimbo” Fernandez were invited as resource persons on February 27.

The lending facility was created to help the service providers secure a loan from the bank while payment from the city government for the supplies and services are still on process.

The lending facility aims to provide credit assistance to the suppliers in order to fast track their business cash cycle, to help generate more deposits for DBP from the city and its suppliers and to help enhance good partnership with the contractors. The system, however, is optional for the suppliers.

Councilor Jose Daluz III has raised concerns on the assurance that the service providers will pay its loan and why the city needs to enter a Memorandum of Agreement with the DBP.

Osmeña explained that the city government will not act as guarantor but would merely issue a certification that the barrower is an accredited supplier.

Among the responsibilities of the city is to ensure that all eligible borrowers possess the qualifications set by DBP, assist in the implementation of the guidelines, rules, policies of lending facility, as well as the terms and conditions, among others.

The bank on the other hand will provide funds for lending facility, which is 50% of the city’s daily balance of its deposits, extend credit assistance to eligible borrowers with validated contract to the city, submit list of borrowers whose loan applications have been approved, and inform the city of any amendments of the terms and conditions of the lending facility.

Under the terms and conditions, the contractors are allowed to borrow up to 80% of the amount of goods and services delivered to the city.