Are you a bank or a non-bank financial intermediary that is currently engaged or will engage in lending to micro, small and medium enterprises?

Then, Small Business Corporation has this to offer:

SBC offers its mSME Wholesale Lending Program to provide funding to financial institutions nationwide for lending to mSMEs. It improves the ability of these institutions in mSME lending. The Program provides funding access even to small conduits in the countryside which have positioned as mSME lenders.

It provides funding at terms properly matched with the requirements of mSMEs. 
The Program impacts on the vision to have vibrant mSMEs through ensuring liquidity in the financial system for mSME credit by granting banks better cost efficiency and opening up more credit opportunities for mSMEs.

Facilities:

  • SME-FAST or Funding Access for Short Term Loans – wholesale short-term funding
  • SME FIRM or Funding for Investments in Regional Markets – wholesale medium-term funding

Terms of SBC Funding

  1. SBC funding is in the form of a 1-year omnibus credit line (OCL) available for the PFI's short and medium SME portfolio.
  2. Funding may be up to 90% of the outstanding loan balance of the MSME sub-loan, but not to exceed the ceiling per SME borrower set by SBC.
  3. The SBC funding may be up to a maximum of 5 years. (The sub- loan may, however, exceed 5 years.)

Funding Options

  1. Short-term portfolio rediscounting, where a batch of sub-loans is funded based on the earliest maturing PN
  2. Individual rediscounting where there is matching of terms
  3. Medium term on-lending (for liquidation in 7 days)
  4. Advance drawdown (for liquidation in 30 days)

Minimum Qualification:

For Financial Institution

  1. Must be a financial institution which may include banks and financing/leasing companies
  2. Latest CAMELS rating of at least “3” , if applicable
  3. Positive net income for the past three years
  4. Past due rate of not more than 15%
  5. Capital adequacy ratio of at least 10% for banks; of at least 20% for non-banks
  6. With operational MSME lending unit
  7. No negative credit record

For Sub-Borrower MSME

  1. At least 60% Filipino-owned enterprise, as registered with DTI or SEC
  2. Asset size of not more than P100 Million pesos, exclusive of value of land where the project is located
  3. Positive income for the past one year based on BIR-filed financial statements
  4. Debt-equity ratio of not more than 80:20
  5. Not belonging to SBC's exclusionary list of industries, as follows:
    • Real estate development (mSME contractors are qualified);
    • Pure trading of imported commodities (unless value-added services are employed which impact positively on the domestic market); and
    • Vice-generating activities

mSME Sub-Loan Funding Criteria

The PFI is given a free hand on how to package the loan in favor of the mSME sub-borrower as long as the following SBC funding criteria are met:

  1. The outstanding balance of the sub-loan must be at least P100.0 thousand. (SBC shall process in batches of at least P500.0 thousand worth of sub-loans.)
  2. The sub-loan should have a remaining term of at least 70 days.
  3. The sub-loan should be current and has had no experience of restructuring.
  4. A grace period on principal may be allowed of up to one year for fixed asset loans.
  5. Any portion used for land acquisition shall be limited to 25% of the loan.
  6. In case of term loans exceeding 365 days, a regular amortization of the loan on a monthly, quarterly or semi-annual basis is required.

Miscellaneous Guidelines

  1. Sub-loans refinanced from another financial institution are qualified.
  2. Funding for the same sub-borrower may transpire for any number of times within the life of the OCL.
  3. DOSRI sub-loans are not qualified.
  4. Co-funding by another wholesale source is not allowed.

Required Collateral Cover on the Sub-Loan

  1. At least 50% REM (may be based on the outstanding balance of the loan in the case of amortized term loans)
  2. At least 100% CHM and/or REM combination, if 50% REM cover cannot be complied with (may be based on the outstanding balance of the loan in the case of amortized term loans)
  3. Tax declarations may be accepted for REM at a maximum loan value of P500.0 thousand
  4. May be on clean basis if covered by a Tripartite Agreement between the PFI, the sub-borrower and its anchor firm-buyer, providing for a sound collection capture mechanism in favor of the PFI. (In lieu of hard collateral, there shall be an assignment of the receivables.)

Handling of Collateral Titles of Ownership

  1. For physical submission to nearest SBC office
  2. A deed of custodianship suffices for commercial banks and PFIs with platinum accreditation with SBC

Documentary Requirements
PFI Accreditation

  1. Letter of intent to participate in SBC wholesale lending program
  2. Corporate papers, as follows:
    • Board resolution to borrow from SBC and on authorized signatories
    • Articles of incorporation and by-laws
    • Ownership and management profile, and corresponding personal information sheets (as submitted to BSP if applicable)
    • Profile of MSME lending unit
    • Company briefer and/or annual report
  3. Applicable financial reports, as follows: (as submitted to BSP in case of banks)
    • BSP report on Camels rating
    • Latest interim financial statements (not more than 3 months old )
    • Past 3 years audited financial statements
    • Latest risk-based capital adequacy ratio
    • Year-end report on specific and general loan-loss provisioning
    • Latest status report on DOSRI loans
    • Schedule of borrowings and corresponding certificate of good standing from creditors, if applicable

On a case-to-case basis, SBC may grant a token OCL amount of not more than P5.0 Million to PFIs without them having to submit the standard documents. This is for as long as the PFI is proven to qualify under SBC’s minimum criteria for accreditation. Any OCL increase shall go through the standard evaluation requirements.

Sub-Borrower Documentary Requirements Upon Loan Availment

For submission to SBC prior to loan release

  1. Information sheet of the sub-borrower as prepared by the PFI (SBC form)
  2. PFI loan approval in favor of sub-borrower
  3. Sub-borrower's PN with consent to assignment, disclosure statement and amortization schedule

Should be available at the PFI office for SBC post-release documents inspection

  1. Loan agreement between PFI and sub-borrower
  2. Sub-borrower loan ledger
  3. PFI's calculation of the sub-borrower's financials Sub-borrower's business permit or certification

Then, Small Business Corporation has this to offer:

SBC offers its mSME Wholesale Lending Program to provide funding to financial institutions nationwide for lending to mSMEs. It improves the ability of these institutions in mSME lending. The Program provides funding access even to small conduits in the countryside which have positioned as mSME lenders.

It provides funding at terms properly matched with the requirements of mSMEs. 

The Program impacts on the vision to have vibrant mSMEs through ensuring liquidity in the financial system for mSME credit by granting banks better cost efficiency and opening up more credit opportunities for mSMEs.

Facilities:

  • SME-FAST or Funding Access for Short Term Loans – wholesale short-term funding
  • SME FIRM or Funding for Investments in Regional Markets – wholesale medium-term funding

Terms of SBC Funding

  1. SBC funding is in the form of a 1-year omnibus credit line (OCL) available for the PFI's short and medium SME portfolio.
  2. Funding may be up to 90% of the outstanding loan balance of the MSME sub-loan, but not to exceed the ceiling per SME borrower set by SBC.
  3. The SBC funding may be up to a maximum of 5 years. (The sub- loan may, however, exceed 5 years.)

Funding Options

  1. Short-term portfolio rediscounting, where a batch of sub-loans is funded based on the earliest maturing PN
  2. Individual rediscounting where there is matching of terms
  3. Medium term on-lending (for liquidation in 7 days)
  4. Advance drawdown (for liquidation in 30 days)

Minimum Qualification:

For Financial Institution

  1. Must be a financial institution which may include banks and financing/leasing companies
  2. Latest CAMELS rating of at least “3” , if applicable
  3. Positive net income for the past three years
  4. Past due rate of not more than 15%
  5. Capital adequacy ratio of at least 10% for banks; of at least 20% for non-banks
  6. With operational MSME lending unit
  7. No negative credit record

For Sub-Borrower MSME

  1. At least 60% Filipino-owned enterprise, as registered with DTI or SEC
  2. Asset size of not more than P100 Million pesos, exclusive of value of land where the project is located
  3. Positive income for the past one year based on BIR-filed financial statements
  4. Debt-equity ratio of not more than 80:20
  5. Not belonging to SBC's exclusionary list of industries, as follows:
    • Real estate development (mSME contractors are qualified);
    • Pure trading of imported commodities (unless value-added services are employed which impact positively on the domestic market); and
    • Vice-generating activities

mSME Sub-Loan Funding Criteria

The PFI is given a free hand on how to package the loan in favor of the mSME sub-borrower as long as the following SBC funding criteria are met:

  1. The outstanding balance of the sub-loan must be at least P100.0 thousand. (SBC shall process in batches of at least P500.0 thousand worth of sub-loans.)
  2. The sub-loan should have a remaining term of at least 70 days.
  3. The sub-loan should be current and has had no experience of restructuring.
  4. A grace period on principal may be allowed of up to one year for fixed asset loans.
  5. Any portion used for land acquisition shall be limited to 25% of the loan.
  6. In case of term loans exceeding 365 days, a regular amortization of the loan on a monthly, quarterly or semi-annual basis is required.

Miscellaneous Guidelines

  1. Sub-loans refinanced from another financial institution are qualified.
  2. Funding for the same sub-borrower may transpire for any number of times within the life of the OCL.
  3. DOSRI sub-loans are not qualified.
  4. Co-funding by another wholesale source is not allowed.

Required Collateral Cover on the Sub-Loan

  1. At least 50% REM (may be based on the outstanding balance of the loan in the case of amortized term loans)
  2. At least 100% CHM and/or REM combination, if 50% REM cover cannot be complied with (may be based on the outstanding balance of the loan in the case of amortized term loans)
  3. Tax declarations may be accepted for REM at a maximum loan value of P500.0 thousand
  4. May be on clean basis if covered by a Tripartite Agreement between the PFI, the sub-borrower and its anchor firm-buyer, providing for a sound collection capture mechanism in favor of the PFI. (In lieu of hard collateral, there shall be an assignment of the receivables.)

Handling of Collateral Titles of Ownership

  1. For physical submission to nearest SBC office
  2. A deed of custodianship suffices for commercial banks and PFIs with platinum accreditation with SBC

Documentary Requirements:

PFI Accreditation

  1. Letter of intent to participate in SBC wholesale lending program
  2. Corporate papers, as follows:
    • Board resolution to borrow from SBC and on authorized signatories
    • Articles of incorporation and by-laws
    • Ownership and management profile, and corresponding personal information sheets (as submitted to BSP if applicable)
    • Profile of MSME lending unit
    • Company briefer and/or annual report
  3. Applicable financial reports, as follows: (as submitted to BSP in case of banks)
    • BSP report on Camels rating
    • Latest interim financial statements (not more than 3 months old )
    • Past 3 years audited financial statements
    • Latest risk-based capital adequacy ratio
    • Year-end report on specific and general loan-loss provisioning
    • Latest status report on DOSRI loans
    • Schedule of borrowings and corresponding certificate of good standing from creditors, if applicable

On a case-to-case basis, SBC may grant a token OCL amount of not more than P5.0 Million to PFIs without them having to submit the standard documents. This is for as long as the PFI is proven to qualify under SBC’s minimum criteria for accreditation. Any OCL increase shall go through the standard evaluation requirements. 

Sub-Borrower Documentary Requirements Upon Loan Availment

For submission to SBC prior to loan release

  1. Information sheet of the sub-borrower as prepared by the PFI (SBC form)
  2. PFI loan approval in favor of sub-borrower
  3. Sub-borrower's PN with consent to assignment, disclosure statement and amortization schedule

Should be available at the PFI office for SBC post-release documents inspection

  1. Loan agreement between PFI and sub-borrower
  2. Sub-borrower loan ledger
  3. PFI's calculation of the sub-borrower's financials Sub-borrower's business permit or certification

There's more...

As an off shoot of the SME wholesale lending program, another wholesale lending window - the Wholesale Lending facility for graduating micro enterprises - which aims to increase the credit access of graduating micro enterprises and those enterprisesregistered under the Barangay Micro Business Enterprise (BMBE) Law, through the participating financial institutions as retail lending conduits.

Given the nature of the graduating micro enterprises, considerations are made by SBC in terms of sub-borrower collateral (may be unsecured), business registration (any valid permit from the local government suffices), and required financials (financial information simply based on the certification of the PFI suffices).

Minimum Qualification of the Graduating Micro Sub-Borrower:

  1. At least 60% Filipino-owned enterprise; any valid permit will suffice as business registration
  2. With asset size of not more than P3.0 million
  3. Has sound financial condition as certified by the PFI in the absence of full financial statements (with positive income for the past immediate year and its debt-equity ratio is not more than 80:20)
  4. Total loans inclusive of the PFI’s is not more than P500.0 thousand
  5. Not belonging to SBC's exclusionary list of industries:
    • Real estate development (MSME contractors are qualified) ;
    • Pure trading of imported commodities (unless value-added services are employed which impact positively on the domestic market); and
    • Vice-generating activities

Funding options and loan terms are the same as under the SME Wholesale Lending Program.

In addition to banks and NBFIs, this wholesale lending window is also open to microfinance institutions such as cooperatives and non-government organizations that have graduating micro borrowers.