How can SMEs avail of the funds being allocated by the government under SULONG?
SMEs can approach any of the following government financial institutions (GFIs):
- Development Bank of the Philippines (DBP)
- Land Bank of the Philippines (LBP)
- National Livelihood Support Fund (NLSF)
- Small Business Corporation (SB Corp.)
- Philippine Export-Import Credit Agency (PHILEXIM)
- Quedan and Rural Credit Guarantee Corporation (QUEDANCOR)
Detailed financing programs here
Are collaterals required? If so, what assets are acceptable?
The program will not decline a loan only on the basis of inadequate collateral. However, the borrower must be willing to mortgage any available business and personal collateral, including assets to be acquired from the loan, to secure the borrowing.
Acceptable collateral are postdated checks, registered/unregistered real estate mortgage (REM)/chattel mortgage (CHM), or the assignment of life insurance. In addition, for franchisees, the following may be considered: corporate guarantee and assignment of lease rights.
If the loan purpose is for export packing credit, a borrower may assign his letter of credit (LC)/PO or sales invoice.
Aside from the interest rate, what other fees must be paid?
A one-time application and evaluation fee of P2,000 for every P1 million, a front-end fee of 1% of approved loan, and a commitment fee of 0.125% of the unavailed balance for long term loans.
How long does it take to process the loan?
This will depend on the government financial institution (GFI). For example, Small Business Corporation (SB Corp.) can process the loan within two weeks after receipt of complete documentation.
What are the major financing programs under the Plan?
The SME Unified Lending Opportunities for National Growth (SULONG) Program is the brand name for the financing initiatives under the Plan. Under SULONG, government financial institutions (GFIs) have allocated funds to be lent out to SMEs. This will be achieved through the following:
- Standardized Unified Lending Program by GFIs for SMEs
- Standardized Accreditation Program by GFIs for rural and thrift banks
Moreover, in the following policies, structural changes are being proposed to facilitate SME lending:
- Commission on Audit (COA) rules
- Bangko Sentral ng Pilipinas (BSP) rules
- Improvement of credibility of Small Business Corporation (SB Corp.) through sovereign guarantee and increased subscription
- Operation of a credit bureau
- Implementation of a credit rating system
The One Town, One Product, One Million Pesos’ Program of PGMA is also a part of the Plan.
What financial ratios/hurdles must a borrower meet?
The debt-equity ratio must at most be 80:20 after the loan. For franchisees, the required ratio is 70:30.
In addition, the borrower must show positive income for the preceding year. Should the small and medium enterprise (SME) borrower’s financials show negative income in the past year, the government financial institution (GFI) may consider their average income for the last two or three years.
What is the interest rate for loans under this program?
The participating government financial institutions (GFIs) will charge the same rate for the program based on a regular review. In its program launch, the interest rate for loan releases until 30 June 2003 shall be 9% for short-term loans; 11.25% for medium-term loans of up to 3-years, and 12.75% for loans over 3-years to five years.
What is the maximum financing?
For short-term loans, the program can fund up to 70% of the value of the LC/PO (export packing), or 70% of working capital requirement (temporary working capital); maximum of P 5 million. For long-term loans, 80% of the incremental project cost, maximum of P5 million.
What is the repayment term?
For short-term loans, a maximum of one year. For long-term loan, a maximum of five years, inclusive of a maximum of one year grace period on principal monthly amortization.
What type of loans may be funded?
For short-term loans, the entrepreneur may tap the program either for export financing (export packing credit) or a credit line for temporary working capital. For long-term loans, small and medium enterprises (SMEs) may apply for loans for permanent working capital, or to purchase equipment, a lot, or to construct a building/warehouse.
Who qualifies to borrow under SULONG?
- Enterprises in all industries except trading of imported goods, liquor, cigarettes, and extractive industries
- Enterprises that are at least 60% Filipino owned, whose assets are valued at not more than P 100 million, excluding the value of the land, or subject to ownership rules as defined under existing Philippine laws for specific industries
Will SULONG replace the other programs and products of the participating government financial institutions (GFIs)?
No, the loans under the SULONG program are IN ADDITION to the existing financial services of the participating government financial institutions (GFIs).
For more information, contact:
Department of Trade and INdustry (DTI)
385 Industry and Investments Bldg.,
Sen. Gil Puyat Ave., Makati City
Telephone: (02) 751-0384