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

Agri-Fishery Microfinance Program

The Agri-Fishery Microfinance Program (AFMP) is a joint program of the Department of Agriculture (DA), the Agricultural Credit Policy Council (ACPC), and the Land Bank of the Philippines (LBP) to support farmers/fisherfolks engaged in the priority commodities of the DA. Created by virtue of ACPC Resolution No. 31-01 Series of 2007, the AFMP provides agri-fishery loans to qualified institutional borrowers and to small farmers and fishing households.

The AFMP is one of the lending programs under the Agro-industry Modernization Credit and Financing Program (AMCFP) - the government's umbrella financing program for agriculture and fisheries.

Program Objective

To improve the incomes of small farm and fishing households through improved access to financial services that can help enable them to diversify income sources and/or improve the profitability of their main agricultural or fishing activities.

Program Scheme

Under the AFMP, the DA renders technical advice as to the appropriate technologies and production costs and returns of farm/fishing activities to be given assistance by the Program.

The Land Bank of the Philippines (LBP) provides portfolio re-discounting, working capital and term loans to qualified borrower organizations/institutions. Borrower organizations/institutions may be (a) organizations with farmer/fisherfolk members that will utilize the credit funds to finance value chain activities of small farmers/fisherfolks or (b) credit retailers that will extend agri-fishery microfinance loans to small farming/ fishing households.

The ACPC reviews, approves and conducts validation of loans charged against the DA-ACPC Agri Micro Fun

Program Features

A. Borrower Organizations / Institutions

1. Eligible Organizations/Institutions

• 1.1 Bank Accredited Cooperatives (BACs) and other Accredited Conduits of LBP {Type 1). These are institutions that are currently accredited with Land Bank and have passed the Risk Asset Acceptance Criteria (RAAC) for microfinance.
• 1.2 BACs and other Accredited Conduits that have yet to pass the RAAC {Type 2). These are institutions that are currently accredited with Land Bank but have yet tp pass the RAAC for microfinance.
• 1.3 Non-BACs/Potential Newly Accessing Cooperatives (PNAC) and other Organizations {Type 3). These institutions are not accredited with Land Bank but are considered critical in the delivery of financial services in the agri-fisheries sector.

2. Types of Financing Facilities

• 2.1 Portfolio Rediscounting. Through a credit line provided by Land Bank, the borrower organization/institution can lend to individual borrowers whose promissory notes (PNs) are endorsed to Land Bank for 100% rediscounting.
• 2.2 Working Capital Loan. A short term loan to cover the operational and management expenses of an income-generating project proposed by a borrower organization/institution.
• 2.3 Term Loan. A loan with a longer period of repayment schedule to enable the borrower organization/institution to expand its project's operational capacities and to increase its profits over a definite period of time.

* For Types 1 and 2 organizations/institutions, the additional loan to be extended shall be on top of existing approved lines provided that such borrower organization/institution does not exceed the absorptive capacity limits set by Land Bank.

3. Financing terms

3.1 Credit Limits

• Type 1 organizations/institutions : Regular Land Bank limits shall apply
• Type 2 organizations/institutions : Regular Land Bank limits shall apply
• Type 3 organizations/institutions : Up to 85:15 debt to equity ratio but not to exceed P10.0 Million

3.2 Interest Rate

• The applicable interest rate for all types of borrower organization/ institution shall be based on the prevailing interest rates of Land Bank.

3.3 Loan Maturity

• Portfolio Rediscounting : Up to 180 days
• Working Capital Loan : Up to 360 days
• Term Loan : Up to 3 years

3.4 Security/Collateral

• Assignment of sub-borrower Promissory Notes including underlying collaterals
• Other securities as may be required by Land Bank

3.5 Mode of Payment

• Portfolio Rediscounting:  Principal and interest payable upon PN maturity
• Working Capital Loan :  Upon PN maturity but with interest paid monthly or quarterly
• Term Loan : Amortized quarterly on principal Interest (with grace period on rincipal of 6 months)

B. Sub-Borrowers

1.  Eligible Sub-borrowers

• Eligible sub-borrowers are the spouses, household heads or adult working members of small farming/fishing households. Only one member per household is allowed to borrow at a time.

2. Loan Facilities

• 2.1 Microfinancing Micro loans to support any or a combination of farm, off-farm/ non-farm activities.
• 2.2 Value Chain Financing Loans to finance any of the value chain activities (production, processing and marketing) with direct forward or backward link with small farmers/fisherfolk.

3. Financing Term

3.1 Credit Limits

• Microfinancing Facility: The amount of sub-loan shall be com-^puted based on the assessed repayment capacity of the household's cash flow but not to exceed Php 50,000
• Value Chain Financing: Amount shall not exceed Php 100,000

3.2 Interest Rate

• The applicable interest rate for sub-borrowers shall be based on * the prevailing interest rates'of the chosen conduit organizations/ institutions.

3.3 Loan Maturity and Mode of Payment

• Microfinancing: Not to exceed one year and the amortization schedule shall be based on the household's cashflow. At least 30% of the loan should be amortized, frequency of which shall be at the shortest interval possible, but should not be longer than monthly.
• Value Chain Financing: Loan maturity shall be based on the sub-borrower's capacity to pay but not to exceed one year.

3.4 Security/Collateral

• The chosen conduit organization/institution may require securities on the sub-loans as it may deem necessary. These may include deed of assignment of personal assets (e.g. equipment, vehicles, etc) or issuance of post-dated checks.

For more information, please contact:

DA - Agricultural Credit Policy Council
28/F One San Miguel Bldg., San Miguel Ave.
Ortigas Center, Pasig City
Tel: (02) 636-3392, 634-3320/21/26

Land Bank of The Philippines
Land Bank Plaza 1898 M. H. Del Pilar
cor. Dr. J. Quintos Sts., Malate, Manila
Tel: (02) 522-000, 550-2200, 450-7001