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

SME-FIRM (Funding for Investment in Regional Markets)

Program Title: SME-FIRM (Funding for Investment in Regional Markets)

Program Objectives: A wholesale medium-term funding conduited through banking institutions with recourse to the bank to attain the following:

• To provide SMEs wider access to medium-term credit by improving the financial system's capability to allocate for these requirements;
• To provide incentive to competitive SMEs by way of access to medium-term loans with lower interest rates;
• To provide SMEs a more steady financing cost base that would enable them to grow in their investment areas; and
• To reach out to SMEs in provincial cities and other areas outside of the traditional centers of lending, thereby providing opportunities for growth in the regions.

Eligible Borrowers:

• Enterprises with asset size of not less than P500 thousand and not more than P100.0 Million, excluding the value of land. Relatedly, the enterprise should not be a subsidiary or division of a large enterprise;
• The enterprise is at least 60% Filipino-owned;
• All enterprises except those engaged in farm-level agriculture/ aquaculture production, trading of imported goods, of liquor and cigarettes, in extractive industries, and in housing projects;
• Also excluded are enterprises with the following financial profile;
  • Less than two (2) years profitable experience;
  • Latest current ratio less than 1.2;
  • Latest debt-equity ratio of more than 80:20;
  • Latest return on equity of less than ten percent (10%);
  • Latest accounts receivable level of more than nine (9) months; and
  • Inventory level of more than one (1) year.
• Borrower should be able to capitalize at least 20% of the total cost of putting up the project;
• The project has an estimated internal rate of return of at least 15% during the term of loan.

Loan Purpose:

• Permanent working capital.
• Fixed asset acquisition/construction, where land purchase should not exceed 25% of the total loan amount.

Terms/Requirements:

Amount: Should be within P100,000 to P15.0 Million per borrower. The loan limit applies on an aggregate amount basis to borrowers with related interests by way of stockholdings and/or family ties.

Interest Rate: Shall be set monthly by SB Corporation. The date of availment shall determine the applicable interest rate.

Maturity/Repayment: Term of at least one (1) year and not more than seven (7) years depending on the requirement of the borrower, as follows:

• Fixed asset acquisition/construction - Up to seven (7) years repayment term inclusive of one (1) year grace period on principal payment;
• Permanent working capital - Up to five (5) years repayment term inclusive of six (6) months grace period on principal payments. In case of combinations where the permanent working capital component exceeds fifty percent (50%) of the total loan amount, the longer term for the fixed asset component may apply to the entire loan.

The loan is payable either monthly, quarterly or semi-annually.

Security:

• Real Estate Mortgage (REM) cover with loan value equivalent to at least fifty percent (50%) of the loan amount;
• Unencumbered time/hold-out deposits of at least equal to the loan amount;
• For accredited leasing companies, chattel mortgage (CHM) cover with loan value equivalent to at least 70% of the loan amount;
• From the Bank, there should be a Deed of Assignment with Recourse on all rights, interests and/or titles covering the rediscounted PN; and,
• Deed of Undertaking with Custodianship, if applicable.

Contact Details:

Mr. Hector M. Olmedillo
Vice President - Institutional Market Finance Group
Phone: (632) 751.1888
Fax: (632) 813.5726
e-mail:  holmedillo@sbgfc.org.ph