Financing Programs Loans and Financing Programs for Micro, Small and Medium Enterprises

ADB-Air Pollution Control Credit Facility

Program Title:  ADB-Air Pollution Control Credit Facility

Program Objective: A credit facility from the Asian Development Bank available in Pesos to provide financing to private enterprises (sub-borrowers) for projects that will improve the air quality or reduce air emissions in the Metro Manila Air Shed (NCR, Rizal, Batangas, Cavite, Laguna, Quezon, Bulacan, Pampanga, Bataan) and other key cities (Cebu, Davao, etc.).

Eligible Sub-Borrowers:

• Sole Proprietorship
• Partnership
• Corporation (at least 70% Filipino-owned)
• Multi-purpose cooperative

Eligible Projects:

• Purchase/installation of air quality monitoring equipment;
• Purchase/installation of pollution control equipment;
• Procurement of new processes and other source equipment; and,
• Procurement of new and rehabilitation of an existing public transport fleet.

Loan Purposes:   Project-related expenses not exceeding 75% of the total costs shall be eligible for financing. The fund will be available for:

• Fixed asset acquisition and,
• Working capital (initial and/or incremental).

Terms/Requirements:

Amount:   Maximum of Y611,475,000 or its equivalent in Pesos

Interest Rates:

• Variable rate (with a one-time option to convert into a fixed rate)
• Fixed rate (prevailing variable rate plus premium, with no option to convert)

The on-lending rate to the sub-borrower will be negotiated between LANDBANK and the sub-borrower.

Maturity / Repayment:   Maximum repayment of 12 years with a maximum grace period of 2 years and 3 quarters on principal payment.

Security: Fully secured by tangible collaterals as required by LANDBANK.

Fees and Charges:

• Commitment Fee:  % of 1% or 0.75% per annum
• Prepayment Penalty Fee: 0.125% of the principal amount of loan to be prepaid

Sub-borrowers Qualifying Criteria:

• A debt to equity ratio within the 75:25 benchmark;
• A profitability track record of at least three (3) years, although start-up enterprises are also eligible;
• No ownership or labor disputes for the past three (3) years;
• An acceptable account profitability ratio of at least 3%;
• A satisfactory result in the credit, trade and background investigation;
• Fully secured by tangible collaterals as required by LANDBANK;
• Debt service cover of 1.25 times on an average basis over the term of sub-loan with a minimum of 1.00 time in any year; and,
• Each qualified project generating an annual positive cash flow equivalent to at least Y12,296,000 shall have a Financial Internal
• Rate of Return of at least equal to the cost of capital.

Contact Details:

Special Programs Management Department (SPMD)
Phone:  (02) 405-7339, (02) 551-2200 locals 2448, 7640, or 7339
Fax:       (02) 528-8484
e-mail:    vcalderon@mail.landbank.com