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SMALL
Business Corp. (SBC) yesterday said its capitalization
will rise from P5 billion to P10 billion with the
amendment of the Magna Carta for Micro, Small and Medium
Enterprises (MSMEs), or Republic Act 9501, which
mandates increased lending to MSMEs and stricter
compliance guidelines on the mandatory allocation of
credit.
SBC
president and CEO Virgilio Angelo said compliance with
the mandatory allocation, both traditional and
alternative, will be limited to “actual extension of
loans to eligible MSMEs,” actual subscription of
preferred shares of stock of SBC; wholesale lending to
participating financial institutions for on-lending to
MSMEs; purchase and discount of MSMEs receivables, or
loans granted to export, import and domestic traders;
and subscription or purchase of liability instruments
“as may be offered by the SB Corp.”
Before
the amendment, the Bangko Sentral ng Pilipinas (BSP)
provided for alternative forms of compliance.
President Arroyo signed into law the amendment of the
seven-year-old RA 6977, which does not include
microenterprises.
The
amendment provides for an increase in mandatory
allocation of credit resources of all lending
institutions from 8 percent to 10 percent. It requires
that at least 8 percent of the lending portfolio is
allotted to micro and small enterprises and at least 2
percent for medium enterprises. Under the amendment,
microenterprises are now defined as enterprises with
total assets of not more than P3 million, from the
previous threshold amount of P1.5 million.
Small
enterprises are businesses with total assets of not more
than P15 million, while medium enterprises are those
with total assets of not more than P100 million, from
the previous threshold amount of P60 million.
MSMEs
comprise about 98 percent of the country’s businesses
and employs about 70 percent of the work force.
Angelo
said MSMEs are now expected to play a “more crucial
role” in the country’s economic growth.
SBC said
it has released P1.8 billion in loans to the MSME sector
in the first semester of 2008. Last year, it released
P1.7 billion. Based on June 2008 data, the firm’s
best-performing program is its wholesale microfinance.
It has released a total of P435.9 million to its
microfinance conduits, up from P240.4 million in the
same period last year. It is targeting to release P4
billion in loans and guarantees this year. |
