The Small Business Guarantee and Finance Corporation (SBGFC) was created on 24 January 1991 under Republic Act 6977, (as amended by Republic Act 8289). The Corporation was given a mantle of authority to offer a wide range of financial services, specifically for small and medium enterprises engaged in manufacturing, processing, agribusiness (except crop level production) and services (except trading). These financial services include among others guarantee, direct and indirect lending, financial leasing, secondary mortgage, venture capital operations and the issuance of debt instruments for compliance with the mandatory allocation provision.
Aside from the creation of SBGFC, the law likewise has the following significant provisions: a.) the creation of the Small and Medium Enterprise Development (SMED); b.) the mandatory allocation of credit resources to small enterprises; and c.) the rationalization of government assistance programs and agencies concerned with the development of SMEs. SBGFC commenced its operations on July 16, 1992. It is attached to the Department of Trade and Industry and is under the policy, program and administrative supervision of the Small and Medium Enterprise Development (SMED) Council.
At the time of the merger, GFSME was a guarantee fund operated independently by a Management Committee and professional staff under the Livelihood Corporation, a corporation attached to the Office of the President of the Philippines. GFSME’s services were restricted to offering of guarantee services to participating financial institutions lending to SMEs from the time it started commercial operations in 1984.
The merger of the two government financial institution was proposed by DTI Secretary Mar Roxas to create a more effective financial institution better geared to meet the needs of the SME market. With the merger, the National Government became the single biggest stockholder of Small Business Corporation.
As provided for under RA 6977, Small Business Corporation has an authorized capital stock of P5 billion with the initial capitalization of P1 billion in the form of equity investments in common and preferred stocks with each of the five government financial institutions contributing P 200 million.
Small Business Corporation played a key role in the drafting of the SME Development Plan approved by President Gloria Macapagal-Arroyo. The year was also marked by record breaking lending in the Corporation’s retail operation as it posted a total of P278 Million in loan approvals, which exceeded the highest approval level of P180 Million in 1999. Two new programs in retail lending were launched during this period: SME-Guarantee Incubator for DTI-endorsed Projects (SME-GUIDE), and SME-Financing Reach for Exporters through Network Development (SME-FRIEND).
Twelve months later Small Business Corporation hosted the 16th Asian Credit Supplementation Institution Confederation Conference, which is a gathering of credit guarantee institutions in the Asian region. Like the previous year, the Corporation grew its portfolio, this time with loan approval levels reaching the P2 Billion mark.
Successful negotiation of Official Development Loan (ODA) from the Asian Development Bank or ADB (US$25 million), KFW (US$14.04 million) and United Nations International Fund for Agricultural Development or IFAD (US$15 million).
The acquisition of the loan packages included the implementation of technical assistance projects on credit scoring, financial management, product development, business development services and accreditation system.
SB Corporation redesigned its major loan programs and posted a phenomenal 160% growth rate in its microfinance originations. It has adopted a more risk-based lending framework-credit guidelines, pricing, procedures and structures.
It was rated PRS Aa by the Philippine Rating Services Corporation in 2007. A PRS Aa rating means that SB Corporation has a strong capacity to meet its financial commitments relative to other Philippine Corporation.
President Gloria Macapagal Arroyo signed RA 9501 or the Magna Carta for MSMEs. The bill was considered as one of the priority legislative measures of PGMA's administration. The Magna Carta for MSMEs has the following features:
1. Micro-enterprises are now included in the expanded definition of MSMEs;
2. The mandatory allocation of credit resources to MSMEs is increased from 8% to 10% and the period extended to another 10 years.
3. The Micro, Small, and Medium Enterprise Development (MSMED) Council is reorganized and strengthened;
4. Small Business Corporation is further strengthened as the government's financing arm for SMEs; and
5. A congressional oversight committee ob MSME Development is created to monitor and oversee the implementation of the Magna Carta for MSMEs.
SB Corp launched the Risk -Based Lending Movement as a flagship program to obtain the commitment and support of various stakeholders of MSME development in adopting an assesment model that focuses on the enterprise itself rather than the enterprises' capacity to put up or lack of collateral to secure a loan. As an alternative, SB Corp is propagating the use of the Borrower Risk Rating System that it developed with assistance from the Asian Development Bank is assessing risk associated with the prospective borrower. The movement was launched is a series of public events held in NCR, Cebu and Davao.
The Corporation continued to enjoy the confidence of partners and clients as 31 new financial institutions are added to its roster of partner institutions. In addition, about P1.2 billion was raised from banks who purchased MSME notes of the Corporation as an alternative compliance to RA 9501. This note of confidence was given clear and formal confirmation by a PRS Aa- credit rating granted to the Corporation by PhilRatings.
Lending performance has gone beyond the P4.0 billion mark in 2010 registering a 42% increase compared to its slight slump in 2009.
As part of its plan to reach out enterprises in more areas of the country, SBC opened a new area office for North Luzon in Baguio and has established three new desk offices in Palawan, Bacolod and Butuan.
The Philippines through SB Corp has successfully hosted the 23rd Asian Credit Supplementation Institutions Confederation Conference. Sixteen institutions from 11 countries , represented by more than 75 delegates were in attendance in the said conference.
SB Corp also announces the offering of P1.6 billion preferred shares as a means for banks to comply with the mandatory lending provision of the RA 9501.
Marks another milestone in SB Corp history. Celebrating its 20th year, SB Corp. reported a P3.8 billion lending performance.
As a major endeavor, SB Corp hosted the the 21st ACSIC Training Program in September. Thirty-seven participants from 14 ACSIC member institutions in11 countries participated in the program held at the Marriot Hotel in Manila.
Loans to MSMEs for 2012 was recorded as P3.8 billion, national government remittance is at P1.46 billion and availments to the MSME notes reached P15.35 billion as of year-end. It has capacitated 22 rural banks on Risk-Based lending and 82 participants from 71 enterprises on enterprise enhancement.
The 2013 ushered in shifts and innovations in the Corporation's credit facilities and capacity building programs to better serve the MSMEs. It closes the year with more than 37,000 MSMEs financed directly or through its more han 100 active financial institution partners. The year marked the 4th year of SB Corp's Risk-Based Lending capacity building for rural banks, with 23 graduate banks by year-end. The year dramatically ended with the Typhoon Yolanda testing the Corporation's preparedness to respond to disaster and calamities that may affect our MSMEs.
The year 2014 was positive and transformative for a country recovering from the challenges that Typhoon Yolanda brought in. As part of the government's rehabilitation program to typhoon affected areas, the Enterprise Rehabilitation Financing (ERF) Program was launched in Bantayan Island, Tacloban and Samar. The ERF provided the financing support to typhoon-stricken enterprises to build back and recover. SB Corp ended the year with P589 million in MSME loans released to 482 enterprises in Yolanda affected MSMEs.
Two achievements served as highlights of the year 2015. It has maintained its issuer rating of PRS Aa minus from the Philippine Rating Services Corporation (PhilRatings) and earned its ISO 9001:2008 certification for its core processes (lending, guarantee and equity financing) from TUV Rheinland.
2016 is a milestone year as Small Business Corporation celebrates in 25th year of service to the country's Micro, Small and Medium Enterprises. Small Business Corporation remains as the National Government’s third largest provider of SME financing, with a lending portfolio of over P2.5 Billion. There are over 2,937 clients, 143 active partner financial institutions. The Corporation has 5 full service area offices, and 18 desk offices strategically located across the country.