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

Guarantee Programs

Program Titles:

• SME-GEMS (Guarantee for Enterprises in Manufacturing and Services) - Projects which are or will be engaged in manufacturing, services and trade activities, whether for domestic or export market, except trading of cigarettes and liquor, housing, and vice-generating business activities.
• SME-GRAIN (Guarantee Resources for Agribusiness Investments) - Projects in agribusiness except direct farm level of production, livestock, poultry, fishing and aquaculture. Eligible project are those which are one step forward from the above mentioned production activities.
• SME-SMEGLAD (Guarantee Lines for Anchor Industries) - Eligible projects are SMEs that supply goods and services to private business firms commonly referred to as Big Brother Companies.
• Guarantee for Suppliers of Locators of PEZA/ BOI

Programs Objectives:

• To stimulate the flow of credit to the SME sector thru the provision of credit guarantees and other support; and
• To encourage greater participation of financial institutions in the development of SMEs.

Eligible Borrowers:

• Asset size before the loan, exclusive of the value of the land where project is situated:
  • Small Scale - P1.5 Million to P15.0 Million.
  • Medium Scale-More than P15.0 Million up to P100.0 Million.
• Individual/sole proprietorship, partnership, corporation, cooperative, organization or association;
• If a sole proprietorship or partnership, it must be 100% owned and capitalized by Filipino citizen. However, if it is juridical entity, at least 60% of its capital or outstanding stocks must be owned by Filipino citizens;
• Must neither be a branch, subsidiary or division of a large scale enterprise nor may its policies be determined by a large scale enterprise or by persons who are not owners or employees of the enterprise;
• Its latest in-house financial statements must comply with a current ratio of at least 1.20:1.00 and debt-to-equity ratio of at most 80:20 before the loan;
• Must have generated positive income for the immediate past year based on BIR-filed financial statements;
• In the case of new enterprise, the technology must be tested and proven and market must be clearly identified;
• Must have a firm, determined and reliable market and proven managerial capability;
• Projected internal rate of return on investment of at least 15% per annum;
• For new exporters, at least two (2) years profitable performance as local producers or sub-contractors;
• Three-year profitable performance with average annual sales of at least US$100,000.00 or eight (8) LC/PO/SC transactions totaling at least US$200,000.00 must have been consummated if less than three years;
• The exporter/borrower and foreign buyers must be pre-cleared with the negative list of the Bureau of Export Trade Promotion (BETP); and,
• The borrower must have the production capacity to carry out orders.

Loan Purpose:

• Acquisition of Assets:
  • for land or project site acquisition (not more than 25% of the loan amount for guarantee)
  • building improvements/expansion or construction of plant facilities
  • for acquisition of machineries and equipment (new or second hand/reconditioned)
• Permanent Working Capital
• Temporary Working Capital
• Debt retirement/ refinancing
• Financial lease/ lease purchase of a single or variety of machinery, equipment and facilities

Terms/Requirements:

Amount (for guarantee cover):    P100,000.00 to P20.0 Million.

Interest Rate:   Not to exceed 30% per annum inclusive of all fees and charges.

Guarantee Fee:         2% per annum of the guaranteed portion.

Maturity / Repayment:

a. Credit Line - term of one (1) year payable upon maturity of Promissory Notes (PNs).

b.     Term Loan

• Land or project site acquisition / Building improvements/ expansion or construction of plant facilities - maximum of seven (7) years inclusive of two (2) years grace period on principal payments.
• Acquisition of machinery and equipment
  • New equipment: should not exceed the useful economic life of the equipment or not more than five (5) years, whichever is shorter; grace period of up to one (1) year on principal payment.
  • Second hand/reconditioned equipment: term should not exceed 70% of the remaining useful economic life of the equipment or not more than three (3) years, whichever is shorter; grace period of up to one (1) year on principal payment.
• Permanent Working Capital - maximum term of five (5) years inclusive of one (1) year grace period on principal payments.

Term loans shall be paid monthly, quarterly or semi-annually.

• Financial lease/lease purchase - maturity shall not exceed seventy percent (70%) of the useful economic life of an asset which would in no case exceed seven (7) years.

Security:

• Project assets to be financed by loan should form part of collateral.
• Joint and several surety of principal stockholders/partners/officers and non-individual borrowers
• Credit life insurance cover or MRI on individual borrower or owner/ managing partner/CEO/Coo or principal stockholder(s) of corporate borrowers.
• Insurance coverage of project assets offered as collateral against loss and destruction or damage caused by fire and other calamities during the term of the loan at least up to the extent of the loan value.

Contact Details:

Small Business Corporation (Small Business Guarantee and Finance Corporation)
17th & 18th Firs, Antel Corporate Centre
139 Valero Street, Salcedo Village, Makati City

Mr. Hector M. Olmedillo
Vice President - Institutional Market Finance Group
Phone: (02) 751-1888, Fax: (02) 813-5726
Email:   holmedillo@sbgfc.org.ph