pbsp-small & medium enterprise credit program
DESCRIPTION
Enterprise Development Program of the Philippine Business for Social ProgressTRANSCRIPT
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Small and Medium Enterprise Credit ProgramSmall and Medium Enterprise Credit Program
Nurturing Enterprises, Transforming Communities
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Established in 1970, PBSP is the largest corporate-led social Established in 1970, PBSP is the largest corporate-led social development foundation in the Philippines with more than 200 development foundation in the Philippines with more than 200 corporate members. PBSP is committed to the empowerment of corporate members. PBSP is committed to the empowerment of the poor by promoting business sector leadership in poverty the poor by promoting business sector leadership in poverty
reduction programs that lead to self-reliance.reduction programs that lead to self-reliance.
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PBSP’s Core Programs
Area Resource Management
Enterprise DevelopmentEnterprise Development
Corporate Citizenship
Water and Health
Education
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SMEC...
a wholesale lending program that aims to help accredited rural and thrift banks and microfinance institutions increase their loan portfolios to MSMEs.
It also provides business support to accredited financial intermediaries to enhance their lending capabilities to MSMEs
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Background
• Established in 1989 thru a US$13M grant from USAID
• In 1995, ownership of the fund was transferred to DoF, held in trust by DBP
• In 1995 & 1998, KfW (German Dev’t. Bank) augmented funding by P389.7M under a bilateral loan agreement among KfW, Landbank, as the borrower, and PBSP as the Project Executing Agency
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Program Goal
To support the growth and development of MSMEs To support the growth and development of MSMEs providing more and decent job opportunities for providing more and decent job opportunities for
men and womenmen and women
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Program Objectives
• Enhanced institutional capacity of accredited intermediary financial and microfinance institutions through wholesale credit financing and business support services
• Increased MSMEs’ access to financial and business development services
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“The most effective new models (of enterprise development) combine the provision of capital with mentoring, business education, and skills training.”
WRI & IFC, 2007“The Next 4 Billion: Market Size and Business Strategy at the Base fo the
Pyramid”
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Small and Medium Enterprise Credit
(SMEC)
CREDITCREDITBusiness Advisory
Program(BAP)
BDSBDS
PBSP’s Enterprise Development ProgramPBSP’s Enterprise Development Program
Market-based approaches to poverty reduction
THE WAY TO GOTHE WAY TO GO
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SMEC Framework
Donor support
SMEC
Improved economic and
social conditions
Financial Institutions
Infusion of capital and changes in
financing practices
Increase in capital available to enterprises
Enterprises
Increase in investment by
enterprises
Improved enterprise
performance
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Financial Products
Short-Term FacilityShort-Term Facility
• 6-11 months6-11 months• Sub-loan amounts – Php50k to Php1.0 MSub-loan amounts – Php50k to Php1.0 M• Portfolio Financing (Php0.5M min. loan drawdown)Portfolio Financing (Php0.5M min. loan drawdown)• Micro Enterprises (Asset size – Php150k to Php3.0 M) Micro Enterprises (Asset size – Php150k to Php3.0 M) • Funding share (SMEC 80% : IFI 20%) Funding share (SMEC 80% : IFI 20%) • Rediscounting (within 30 days)Rediscounting (within 30 days)• Principal Repayment (balloon at nearest maturity date)Principal Repayment (balloon at nearest maturity date)• Interest Repayment (monthly or quarterly)Interest Repayment (monthly or quarterly)• Interest Rate: 0.5% lower than variable rateInterest Rate: 0.5% lower than variable rate• Securities: Assignment of sub-borrowers PNs, REMs and Securities: Assignment of sub-borrowers PNs, REMs and
other underlying securitiesother underlying securities
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Financial Products
Medium-Term FacilityMedium-Term Facility
• 1-5 years1-5 years• Portfolio Financing (Php 1 M min. loan drawdown)Portfolio Financing (Php 1 M min. loan drawdown)• Micro, Small and Medium Enterprises (MSMEs)Micro, Small and Medium Enterprises (MSMEs)• Max. subloan amount - Php10MMax. subloan amount - Php10M• Funding share (SMEC 80% : IFI 20%) Funding share (SMEC 80% : IFI 20%) • Cash Advance (90 days liquidation)Cash Advance (90 days liquidation)• Term – weighted average life of the portfolioTerm – weighted average life of the portfolio• Quarterly repayment term (Principal + Interest)Quarterly repayment term (Principal + Interest)• Interest Rate: Variable (adjusted quarterly) or FixedInterest Rate: Variable (adjusted quarterly) or Fixed• Securities: Assignment of sub-borrowers’ PNs, REM and Securities: Assignment of sub-borrowers’ PNs, REM and
other underlying securitiesother underlying securities
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Business Development Services
• Capacity development of accredited intermediary financial and microfinance institutions
• Business advisory services to MSMEs through BAP
• Sponsor participation of MSMEs in productivity and competitiveness conferences, business clinics, trade exhibits
• Provide MSMEs and IFIs access to information critical to their businesses
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Institutional Development Support to RBAP
Various trainings P678,075
Research & Policy Analysis P361,350
Computerization & Database Project (1994)
P2.8 million
Hiring & training of additional micro banker programmers (1997)
P140,853
MABS replication project (2001) P2.2 million
Total Grants P6.2 million
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Business Advisory Program (BAP)
structured business advise to MSMEs (agribusiness, food processing, small manufacturing and tourism sectors) in any of business areas—accounting and finance, business planning, marketing, production, operations, organization, technology application, etc.
Improved business performance
Increased profitability
Enhanced creditworthiness
what’s in it for you?
resulting in:
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Qualifications of Intermediary Financial Institutions
• Rural Bank, Thrift Bank, or Microfinance Institution
• Operating for at least three years• Asset Size: TB=P100M up; RB=P50M up;
MFI=P300M up• Committed to MSME development• Financially stable• Governed by sound credit policies• Demonstrated management capability and
performance
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Accreditation Criteria
Management Capability and Performance
30%
Financial Results50%
Credit Process20%
Industry
Peers
1
2
3
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Fund disbursement process
RB
TB
MFI
USAIDDOF
KfW
DBP
Landbank
PBSPSMEC
MSMEs
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Eligible MSME sub-borrowers
• The principal owner is a citizen or permanent legal resident of the Philippines
• Duly registered business organization which is at least 60% owned by Philippine nationals
• Have their principal place of business in the Philippines
• Must be 100% privately-owned with total assets of not more than P15 million at the time the loan is granted
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Qualified business activities
• Trading• Light Industrial Manufacturing• Handicraft• Woodworking• Metalworking• Food Processing• Services• Agri-processing• Non-traditional agri products
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Purpose of loan
• Fixed asset acquisition
• For services related to asset acquisition (e.g. equipment installation and commissioning)
• Working capital (e.g. raw materials, finished goods, operating expenses)
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CALABARZON
GenSan
CDO
Zamboanga del Norte
Negros Occidental
Negros Oriental
Expansion Areas
Cebu City
Tagbilaran City
Pampanga
Bulacan
Nueva Viscaya
NCR
Areas Covered
Iloilo City
Dumaguete City
Isabela
Surigao del Sur
Lanao del Norte
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Fund administration
• Philippine Business for Social ProgressPhilippine Business for Social Progress
• Department of FinanceDepartment of Finance
• Land Bank of the PhilippinesLand Bank of the Philippines
• Development Bank of the PhilippinesDevelopment Bank of the Philippines
• Chamber of Thrift BanksChamber of Thrift Banks
• Rural Bankers Association of the PhilippinesRural Bankers Association of the Philippines
SMEC derives policy guidance from the Project Implementation SMEC derives policy guidance from the Project Implementation Committee (PIC) composed of representatives from:Committee (PIC) composed of representatives from:
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““PBSP aims to combat poverty through enterprise development PBSP aims to combat poverty through enterprise development via job generating programs and by creating and assisting via job generating programs and by creating and assisting
micro, small and medium enterprises through credit and non-micro, small and medium enterprises through credit and non-credit programs. This recognizes the role which enterprise plays credit programs. This recognizes the role which enterprise plays
in development, democracy and in the protection of human in development, democracy and in the protection of human rights.”rights.”
Manuel V. PangilinanChairman, PBSP & PLDT
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For more information, please contact:
The Group DirectorEnterprise Development Group
Philippine Business for Social ProgressPSDC Building, Magallanes cor. Real Sts.,
1002 Intramuros, Manila, Philippines
Telephones: (+63-2) 527-7741 to 48 | Fax (+63-2) 527-3751Email: pbsp.org.ph | [email protected]
Website: www.pbsp.org.ph