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

SME-FORCE (Financing Organizationally Competent and Excellent Franchise Business)

Program Title: SME-FORCE (Financing Organizationally Competent and Excellent Franchise Business)

Program Objectives: A direct lending facility to support various players in the franchising industry, including franchisors, franchisees and suppliers of franchisor-firms.

Eligible Borrowers:

• Filipino-owned enterprise; in the case of corporation, must be at least 60% Filipino-owned;
• Franchisor firm must be a member in good standing of AFFI or
• PFA;Asset size not less than P500.000 and not more than P100 Million (excluding the value of land);
• For non-start ups, latest BIR-filed net income must be at least P10.000; and,
• Project to be financed not into farm-level agri-aqua production, extractive activities or vice-generating operations.

Types of Borrower:

• Start-up or Expanding Franchisee
• Expanding Franchisor
  • If financing is for the establishment of company-owned outlet for possible resale to franchisees: At least 2 profitable years in the franchise business with at least 1 profitable franchisee outlet; and, At least 2 existing company-owned outlets with 2 years profitable experience.
  • If financing is for the establishment of Commissary Hubs - at least 2 profitable years in the franchise business with at least 2 profitable franchise outlets.
• Start-up Franchisor
  • At least 2 years profitable experience in the line of business subject for franchise development
  • At least 2 company-owned outlets
• Supplier of Franchisor
  • Supplier - 2 years track record with the franchisor
  • Franchisor - at least 2 years profitable years and 1 profitable franchise outlet

Loan Purposes:

• Fixed Asset Acquisition
  • Building construction/improvement
  • Equipment/vehicle acquisition
  • Lot acquisition (limited to 25% of total loan)
• Working Capital o    Permanent
  • Temporary - financing of PO issued by franchisor firms
• Loan Refinancing (except for loans from other government financial institutions)

Terms/Requirements:

Amount:

a.     For start-up or expanding franchisee

• Minimum of P200,000
• Maximum of P5.0 Million for small enterprises and P10.0 Million for medium enterprises
• Maximum of 70% of project cost; franchise fee to be strictly financed by equity

b.     Expanding franchisor

• Establishment of company-owned outlet for possible resale to franchisees - maximum of 70% of project cost but not more than P3.5 Million per outlet financed
• Establishment of Commissary Hubs- Limited   to   50%   of project cost of first commissary hub, if still to be set up- Up to 70% of project cost for already existing commissary hub or for succeeding commissary hubs.
• Start-up Franchisor- maximum of P750,000 or 70% of project cost
• Supplier of Franchisor:
  • Up to 70% of the PO net of franchisor's deposit
  • Maximum credit line of P3.0 Million

Interest Rate:

• Fully Secured Loans
  • Up to 1 year - 9.5% per annum
  • U to 3 years-13.8% per annum
  • Up to 5 years - 14.5% per annum
• Partially/At least 50% Secured Loans - Plus 1.0 % point
• Partially/Less than 50% Secured Loans - Plus 2.0 % points
• Additional premium on loan amounts exceeding 10 x of BIR-filed net income

Service Fees:

• Evaluation Fee - 1/2 of 1% of approved loan but not less than P3,000
• Processing Fee - 1/2 of 1% of loan release
• Out-of-town processing fee
  • None for Metro Manila, Cebu and Davao
  • P2,000 for the CALABAR and Region 3 provinces
  • P4,000 or actual air fare for the rest of the country

Maturity / Repayment:

• Term Loan - maximum of 5 years, with up to one year grace period on principal; monthly or quarterly amortization
• Transactional or One-year Credit Line - up to 180 days term per drawdown

Security:

• Start-up or Expanding Franchisee
  • At least 50% franchisor's Corporate Guarantee on the franchisee-borrower's loan; or
  • Equivalent titled REM and/or CHM on motor vehicle
• Expanding Franchisor
  • At least 50% REM and/or CHM on motor vehicles; and,
  • Assignment of rights of outlet to be financed
• Start-up Franchisor - 70% secured by REM and/or CHM on motor vehicles
• Supplier of Franchisor
  • May be clean up to P1.0 Million
  • At least 25% hard collateral if loan is more than P1.0 Million
  • MOA between SBC and franchisor on direct payment to SBC.

Basic Documentary Requirements:

• Accomplished business loan application form (with picture)
• Notarized Client Information Sheet
• Latest in-house and BIR-filed financial statements
• Business registration papers
• Applicable endorsement
• Location map of the project
• Franchise agreement and business plan, in case of start-up franchisee

Contact Details:

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

Direct Lending Program
Ma. Luna C. David
QIC - Finance and Guarantee Sector
Phone: (02) 751-1888
Fax: (02) 813-5726, 894.1677
Email:   ldavid@sbgfc.org.ph