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

Microfinance Program for MFI Retailers

Program Title: Microfinance Program for Microfinance Institutions (MFI) Retailers
Program Objectives:

General:

• To support government efforts to alleviate poverty by empowering the marginalized sector towards economic growth.

Specific:

• To expand the Bank's outreach to the poor who do not have access to the formal financial system;
• To promote the active participation of microfinance institutions in the credit delivery system;
• To promote savings mobilization of poor households; and
• To strengthen partner-MFIs in its microfinance operations and help deliver capability building support to micro-enterprises.

Mode of Credit Delivery: Landbank will provide funds to MFI-Retailers which in turn lend the same to micro loan sub-borrowers.

Program Conduits: As wholesaler of funds, the LBP will tap the following entities as microfinance program conduits.

• Cooperatives (Coops)
• Countryside Financial Institutions (CFIs)
• Non-Government Organizations (NGOs)

Eligibility Requirements for the MFI-Retailers:

• Passed the Risk Asset Acceptance Criteria (RAAC) of the bank;
• New MFIs and other MFIs without existing credit line / loan with PCFC or existing MFI clients of PCFC whose credit requirement is in excess of P100 million;
• Duly registered with CDA in case of coops; BSP and SEC in case of CFIs ; and SEC in case of NGOs;
• With at least three (3) consecutive years experience in lending, one year (most recent) of which is on microfinance operations;
• With audited financial statements (FS) for the last three (3) years (audit conducted by an external auditor);
• With capacity to engage in microfinance, as evidenced by the following:
  • Functioning MIS/ loan tracking system (will allow regular monitoring of microfinance operations as evidenced by timely generation of basic financial, loans tracking, and aging reports using Portfolio at Risk {PAR});
  • With savings mobilization program and microfinance guidelines/ operations manual in place;
  • With microfinance business plan for at least three (3) years as approved by its Board of Directors;
  • At least two (2) members of its Board of Directors (BOD) / officers with one (1) year experience in microfinance and/or intensive training on microfinance (minimum of 7 days training) in accredited/ reputable training institutions;
  • With a separate unit to handle microfinance operations;
  • At least three (3) full-time and trained microfinance officers/staff (minimum of 5 days microfinance training in accredited/reputable training institution/s); and,
  • With a continuing staff development/training program on microfinance.

Credit Facilities Available to Eligible MFIs:

• Short Term Loan : Working Capital and Rediscounting
• Term Loan

Terms/Requirements:

Amount: Short Term Loan / Term Loan

• For Coops - up to 6 times of its networth
• For CFIs - not to exceed its AERA
• For NGOs - should be equal to the requirement of borrowers but not to exceed twice its existing loanable funds (exclusive of borrowings)

Interest Rate:

• Short Term Loan - 91-day T-bill rate + 3% per annum, or 9.5% per annum, whichever is higher. (Aligned with the SULONG rate for short-term PNs, which is set every quarter.)
• Term Loan - 12% + 1% service fee per annum

Rediscounting Rate: Up to 85% of the current outstanding balance of the PNs rediscounted.

Term / Availability:

• Short Term Loan - One (1) year credit line/Up to 360 days PNs
• Term Loan - Up to five (5) years / Maximum of 3 tranches, but to be availed within one year from the date of signing of loan agreement.

Collateral Requirement:

Short Term Loan

• Working Capital - REM or Hold-out on deposit, and/ or government securities for coops and NGOs with PESO rating of 70 to less than 80, and CFIs with CAMELS rating of 3 to less than 4. JSS and Post Dated Checks (PDCs) for coops and NGOs with PESO rating of at least 80; and CFIs with CAMELS rating of at least 4.
• Rediscounting - Assignment of sub-PNs, including sub-borrowers' underlying collaterals; Guarantee cover, if any; JSS of principals; Post Dated Checks (PDCs)

Term Loan   - REM or Hold-out on deposit, and/or government securities.

Contact Details:

Land Bank of the Philippines
Program Management Department (PMD)
1598 M.H. Del Pilar cor. Dr. J. Quintos Sts., Malate, Manila
Phone: (02) 522-0000,  551.2200 locals 2650, 2589
Direct Line:   (02) 405-7309/7427
Fax: (02) 528-8541/42/43
E-mail: sme-pmu@mail.landbank.com