Title: CREDIT GUARANTEE MANAGEMENT UNDER THE ECONOMIC CRISIS AND MEASURES TO BOOST ECONOMY
1CREDIT GUARANTEE MANAGEMENT UNDER THE
ECONOMIC CRISIS AND MEASURES TO BOOST ECONOMY
By DM Delute
2- The Small Business Guarantee and Finance
Corporation (SBGFC), now also known as Small
Business Corporation) was created in 1991 by
virtue of the Magna Carta for SMEs. - It is the financing arm of Dept. of Trade
Industry - Started operations on July 16, 1992.
3VISION
- The champion for a globally competitive and
viable mSME sector
MISSION
Develop and provide financial services and
capacity building support programs in a
progressive and sustainable manner to empower
mSMEs as viable businesses.
4MAJOR FINANCING PROGRAMS
- SME Wholesale Lending
-
- Credit Guarantee Program
- Retail Lending Program
- Wholesale Microfinance Program
5ORGANIZATIONAL STRUCTURE
6GUARANTEE PROGRAM PERFORMANCE
Table 1 Total Accounts Approved from
Y2003-Y2008
7COMPOSITE CLAIMS RATIO
Cumulative from 1993-2008
81. To strengthen the program in both outreach
and sustainability, thus, better serving
banks in their loan guarantee
requirements and expectations in terms of a
robust and reliable guarantee call system
2. To provide a better fit for near bankable
SMEs through more guarantee facility
options, thus, assisting in their
graduation from being pre- bankable to being
fully bankable3. To highlight the surety nature
of the SBC guarantee program where call on the
guarantee can be made if the borrower will not
pay.
CREDIT GUARANTEE PROGRAM REDESIGNED Objectives
9Collateral consideration, including the
credit guarantee is placed solely under the
Facility Risk-Rating (FRR), and the FRR factors
should only affect the pricing of the loan and
not the credit decision.
- Credit supplementation framework
Risk-based orientation
The redesigned program adopts a risk-based
lending framework, moving away from traditional
orientation of the collateral factor, and where
evaluation is purely based on risk factors
pertaining to the borrower as aided by the
Borrower Risk-Rating (BRR) system.
10Early Guarantee Review and Guarantee Call
ProvisionSB Corp. shall make an early issuance
of the Certificate of Completeness of Loan
Documents, in contrast to the earlier
certification process where it would begin only
upon call on the guarantee
- Credit supplementation framework
Pro-active Monitoring and Remedial Management
Posture SB Corp. response to PFIs monitoring
compliance output shall be timely and focused,
with the end to prevent further deterioration of
the weakened business and/ or credit position of
the SME borrower
11- Credit Evaluation Policy
- BRR-based Out of a 10-scale
- BRR system, 1 represents lower
- risk and 10 the highest. BRR 5
- is SBC passing mark.
12TABLE 3 SB Corp. BRR SCORECARD
13(No Transcript)
14TABLE 4 BORROWER RISK RATING
15- The guarantee fee rate is based on the BRR of the
SME borrower. Corresponding change is made
thereafter depending on the fluctuation of the
BRR as obtained from the review and account
monitoring. - The guarantee fee is computed based on the
estimated probability of default under the BRR,
the cost of the 1/3 contingent liability fund of
SB Corp. for the program, and the computed
transaction cost. Presently, the fee ranges from
1.0 to 3.0 per annum.
16Table 5 Guarantee Fee Rate
17Account monitoring covenant sanctions
- The PFI shall be required to conduct a review of
the BRR which includes a project visit on the SME
borrower, and to make a timely report for
submission to SB Corp. This will allow an early
response from SB Corp. in case of BRR
deterioration. -
- The monitoring schedule shall be BRR-based, as
follows - TABLE 6 BRR FREQUENCY
18Other Government Support Programs
- Creation of Credit Surety Fund
-
- -Contributed by participating coops,
- LGUs, Banks and Central Bank.
- -Used to guarantee clean loans of mSMEs who
are members of coops - and obtained loans from banks
19- The Barangay Micro Business Enterprise(BMBE)
Law Creation of BMBE Development Fund - BMBE Law provides exemption from income tax
and minimum wage law to qualified micro
entrepreneur in the countryside. - BMBE DEVELOPMENT FUND used to assist
- mSMEs in various requirements such as skills
training, entrepreneurship development, business
advisory, technology intervention, technology
incubation/commercialization, policy advocacy,
database development, business matching
activities, trade fairs, etc.
20End of presentationMaraming salamat po.