Philguarantee could cover loans of up to P300M next year

PHILIPPINE GUARANTEE Corp. (Philguarantee) said it could cover loans of up to P300 million starting next year, with small-, medium-sized and large organizations eligible to apply.

“For large firms, we are already entertaining inquiries. But actual applications may start early next year,” Philguarantee President and CEO Alberto E. Pascual said in a text message Friday.

The new facility expands the agency’s original P120-billion credit guarantee scheme for micro-, small-, and medium-sized enterprises (MSMEs) affected by the coronavirus crisis.

For applications by bigger firms requiring up to P300 million in loan cover, Mr. Pascual said the agency is still waiting for the Budget department to release P5 billion to service this segment of the market. He said the extra funds can be leveraged 15 times, effectively providing guarantee cover for P75 billion worth of loans.

Guidelines for the new scheme will be submitted to Philguarantee’s governing board on Tuesday, Dec. 1 for approval, he said.

“For 2021, we are targeting only an additional 8,000 MSMEs or gross loans of about P4 billion. For large firms, we have received inquiries for P1 billion, plus new loans for various projects,” he said.

Most of the large firms expressing interest in the upcoming facility are involved in food processing, information technology, healthcare, transport, agriculture production and post harvest facilities.

The additional capital will also be available for guarantee coverage of severely affected non-essential industries, low-cost housing and cooperative banks, he said.

The government launched the MSME credit guarantee program as part of the overall recovery package that will help the economy bounce back from recession. The scheme is intended as a relief measure for the private sector by encouraging lending among banks through state-backed guarantee coverage, as banks are still risk-averse when it comes to the MSME market.

Philguarantee has P23 billion worth of unimpaired capital, bringing its potential guarantee capacity to P345 billion, assuming leverage of 15 times.

Its outstanding guarantees declined 17% from the end of 2019  to P170 billion at the end of September. — Beatrice M. Laforga

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