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SB Corp. lending to small businesses up 23% to P2B

September 24, 2006
SB Corp. lending to small businesses up 23% to P2B. Check it out:
(Philippine Daily Inquirer Via Thomson Dialog NewsEdge) STATE-RUN SMALL BUSINESS GUARANTEE and Finance Corp. said it had released some P2 billion in loans to micro, small and medium-sized enterprises in the first half of the year.

Benel P. Lagua, SB Corp. president and chief executive, said this was 23 percent higher than year-agos P1.7 billion.

From January to June this year, SB Corp. released P1.44 billion in loans under its SME wholesale lending program and P113.7 million under its credit guarantee program.

Also, P189.7 million was released under the wholesale microfinance program and another P353.4 million, under its MSME retail program.

Lagua said 70 percent or P1.46 billion of the amount lent by SB Corp. went to borrowers in Luzon; 18 percent or P387.8 million to Visayas, and 12 percent or P248.8 million went to Mindanao.

Trade Undersecretary Amelia Alonzo, who is also SB Corp. chair, said the agency was confident it would be able to hit its P4-billion target for this year.

In 2005, SB Corp. approved a total of P3.25 billion in loans to SMEs nationwide.

Based on our experience, borrowings usually pick up during the last quarter of the year as SMEs rush to complete their job orders and meet increased consumer demand during the Christmas season, Alonzo said.

Earlier this month, SB Corp. announced it was veering away from collateral-based banking toward risk-based lending in an effort to provide small and medium enterprises greater access to funds.

Officials said the new policy meant that borrowers credit worthiness would be measured based on re-payment capability, managerial ability, production capacity and prevailing market conditions.

Still, ones ability to put up collateral would be among factors that would be consider an enterprise is qualified for a loan.

SB Corp. is pilot-testing its borrowers risk rating (BRR) system this month in assessing the credit worthiness of those applying for loans.

The BRR system, which was developed with funding and technical assistance from the Asian Development Bank, uses the scorecard method in computing the prospective borrowers overall credit standing and credit-risk rating.

Credit investigators would evaluate borrowers using a scale of 1 to 10, with one being the most satisfactory rating and 10 meaning the worst credit risk, and rating of 5 considered the passing mark.

The interest rate and terms of a loan would vary depending on how low the loan applicant scores in the test.

Copyright 2006 Philippine Daily Inquirer. Source : Financial Times Information Limited (Trademark)


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