CREDIT GUARANTEE MANAGEMENT UNDER THE ECONOMIC CRISIS AND MEASURES TO BOOST ECONOMY - PowerPoint PPT Presentation

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CREDIT GUARANTEE MANAGEMENT UNDER THE ECONOMIC CRISIS AND MEASURES TO BOOST ECONOMY

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Title: CREDIT GUARANTEE MANAGEMENT UNDER THE ECONOMIC CRISIS AND MEASURES TO BOOST ECONOMY


1
CREDIT 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.

3
VISION
  • 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.
4
MAJOR FINANCING PROGRAMS
  • SME Wholesale Lending
  • Credit Guarantee Program
  • Retail Lending Program
  • Wholesale Microfinance Program

5
ORGANIZATIONAL STRUCTURE
6
GUARANTEE PROGRAM PERFORMANCE
Table 1 Total Accounts Approved from
Y2003-Y2008
7
COMPOSITE CLAIMS RATIO
Cumulative from 1993-2008
8
1. 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
9
Collateral 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.
10
Early 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.

12
TABLE 3 SB Corp. BRR SCORECARD
13
(No Transcript)
14
TABLE 4 BORROWER RISK RATING
15
  • Guarantee fee structure
  • 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.

16
Table 5 Guarantee Fee Rate
17
Account 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

18
Other 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.

20
End of presentationMaraming salamat po.
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