Surety program benefits 17k firms

MORE than 17000 micro, small and medium enterprises (MSMEs) have benefitted from the loans provided under the public-private credit program Credit Surety Fund, according to the Bangko Sentral ng Pilipinas (BSP).

In a virtual briefing on Wednesday, BSP Governor Benjamin Diokno reported that as of end2020,

an estimated 17,527 MSME borrowers have benefited under the CSF initiative since its launch as an advocacy program in 2008.

This translated to an estimated cumulative loan of P6.93 billion.

The CSF is a credit enhancement scheme designed to increase the creditworthiness of cooperatives, businessmen and MSMEs that are encountering difficulties in getting access to bank credit due to lack of acceptable collaterals and credit information. It provides a surety cover of up to 80 percent of the bank loan availed by a qualified member, which serves as an alternative to hard collateral many MSMEs are unable to provide.

The fund pools monetary contributions from cooperatives, nongovernment organizations, local government units, and partner institutions.

“The CSF demonstrates the power of partnerships. By bringing together regulators, financial institutions, local government units, cooperatives and non-government organizations, the CSF becomes an effective tool not only for sustainable MSME financing, but also for economic development and poverty reduction,” Diokno said.

It serves as alternative security in lieu of the hard collateral required by banks, thereby helping capital-short MSMEs with viable business plans gain access to bank financing.

The passage of Republic Act 10744, or the “CSF Cooperative Act in 2016,” institutionalized the program, granting its separate juridical personality as a special type of cooperative.

Under the law, CSF cooperatives will be regulated and supervised by the Cooperative Development Authority (CDA), being the country’s statutory regulator of cooperatives.

Diokno added that 55 CSFs have been established across the country as of last March 31, of which 14 are registered with the CDA.

“At least 15 more CSFs are expected to be registered by yearend, with the rest likely to complete the process next year,” he said.