SBGFC Micro Finance Program

1. SBGFC Micro Finance Program As funded by a US$15Million ODA loan from International Fund for Agricultural Development (IFAD)

2. Micro Finance Program • Our Objective Reducing poverty through Micro Finance.

3. The SBGFC Micro Finance Program • Lending guidelines is differentiatedbased on the category or nature of operation of the conduit. • Large, focused, well established MFIs shall be allowed higher loan limitsrelative to young, small micro-finance providers. • Eligibility criteria for large conduits is stricter, but has wider incentives in terms of loan terms including pricing.

4. The SBGFC Micro Finance Program • Participation by small conduits in the poorest provinces, as identified by IFAD thru its Rural Micro Enterprise Promotion Program (RuMEPP), shall be allowed through a relaxation of the eligibility criteria. • SBGFC will assist small conduits in their capability-building requirementsthru the technical assistance component of the IFAD loan.

5. The SBGFC Micro Finance Program • Target end-borrowers are pre-enterprise micros, which are either: • Start-up micro entrepreneurs • Not registered • With no or limited credit and livelihood track record • No tangible business assets • Graduating micro entrepreneurs • Willing to register as an enterprise • Have a livelihood track record of at least one year • Have a credit track record with an MFI • With some tangible business assets

6. The SBGFC Micro Finance Facilities • Micro Finance Facilities • MICRO-LEAD • Lending through Lead Microfinance Institutions • MICRO-LOCAL • Lending through MSME Rural Banks • MICRO-LEAP • Lending through Small Microfinance Providers

7. MICRO-LEAD Lending thru lead micro finance institutions whose lending portfolio and organizational structure are predominantly or at least 60% micro finance.

8. Micro Finance Facility- MICRO-LEAD Target Conduits • Medium and large microfinance institutions (MFIs) Purpose of Loan • Retail re-lending to micro borrowers • Wholesale re-lending to MFIs

9. Micro Finance Facility- MICRO-LEAD Loan Amount • Medium MFIs • - Minimum of P3 Million • - Maximum of P50 Millionon the first year • - Maximum of P100 Millionon succeeding years • Large MFIs • - Minimum of P15 Million • - Maximum of P100 Millionon the first year • - Maximum of P200 Millionon succeeding years Line Drawdown • Minimum of 5%, up to 20% of credit line per drawdown

10. Micro Finance Facility- MICRO-LEAD Term and Line Expiry • One year credit line, subject to renewal • One year only; may be up to 2 years, but only if justified by nature of micro-borrowers’ business as in the case of graduating micros Repayment Term per Drawdown • 360 days, payable quarterly Security • Continuing Surety Agreement on principals

11. Micro Finance Facility- MICRO-LEAD • Minimum Qualifications of MFI-Borrower

12. Micro Finance Facility- MICRO-LEAD • Minimum Qualifications of MFI-Borrower • MFIs in the RuMEPP priority provinces that do not pass the PAR requirement may still be considered for accreditation if they have a CAR of not less than 20% and a PDR of not more than 10%

13. MICRO-LOCAL Micro lending thru MSME-oriented rural and cooperative banks.

14. Micro Finance Facility- MICRO-LOCAL Target Conduits • Rural Banks -may be start up in micro finance • Cooperative Banks Purpose of Loan • Retail re-lending to micro borrowers

15. Micro Finance Facility- MICRO-LOCAL Loan Amount • Minimum of P200 Thousand • Maximum of P50 Million on the first year • Maximum of P100 Million on the succeeding years Line Drawdown • Minimum of P100 Thousand • Maximum of 20% of credit line

16. Micro Finance Facility- MICRO-LOCAL Term and Line Expiry • One year credit line, subject to renewal • One year only; may be up to 2 years, but only if justified by nature of micro-borrowers’ business as in the case of graduating micros Repayment Term per Drawdown • 360 days, payable quarterly Security • Continuing Surety Agreement on principals (must) • Hard collateral may be required if start up in microfinance

17. Micro Finance Facility- MICRO-LOCAL Minimum Qualification of MFI-Borrower • Track record - at least 3 years as a bank; may be on start up basis in microfinance • Microfinance clients - At least 50; if start up, must plan for at least 50 • Manpower– At least 3 exclusively for microfinance operations; if start up, should plan for at least 3 • Asset size– Should conform with BSP guidelines • CAMELS rating – At least “3”

18. Micro Finance Facility- MICRO-LOCAL Minimum Qualification of MFI-Borrower • Financial ratios • Current Ratio – At least 1.0 • Capital Adequacy Ratio (CAR) – At least 10% (per BSP guidelines • Microfinance Portfolio at Risk (PAR) - Not more than 10% • Past Due Rate – Should not exceed 20%, preferably within industry average

19. MICRO-LEAP Micro lending thru small microfinance providers such as community cooperatives and local non-government organizations (NGOs) or people’s organizations (POs) who do not meet the SBGFC standards under Micro-LEAD.

20. Micro Finance Facility- MICRO-LEAP Target Conduits • Small Community Cooperatives • Small Non-Government Organizations (NGOs) • People’s Organizations (POs) • Lending Companies Purpose of Loan • Retail re-lending to micro borrowers

21. Micro Finance Facility- MICRO-LEAP Loan Amount • Minimum of P200 Thousand • Maximum of P10 Million on the first year • Maximum of P20 Million on the succeeding years Line Drawdown • Minimum of P100 Thousand • Maximum of 20% of credit line

22. Micro Finance Facility- MICRO-LEAP Term and Line Expiry • One year credit line, subject to renewal • One year only; may be up to 2 years, only if justified by nature of micro-borrowers’ business as in the case of graduating micros Repayment Term per Drawdown • 360 days, payable quarterly Security • Continuing Surety Agreement on principals (must) • Hard collateral may be required on case to case basis

23. Micro Finance Facility- MICRO-LEAP Minimum Qualifications of MFI-Borrower • Asset size – At least P500 Thousand (P1.5 Million for lending companies) • Net Worth – At least P300 Thousand • Track record - at least 1 year microfinance operations (at least 3 years for lending companies) • Microfinance clients - At least 20 micro borrowers • Manpower – At least 2, one of whom may be part-time

24. Micro Finance Facility- MICRO-LEAP Minimum Qualification of MFI-Borrower • Financial ratios • Current Ratio – At least 1.2 • Capital Adequacy Ratio – At least 20% • Microfinance Portfolio-at-Risk (PAR) * – Not more than 10% • Past Due Rate – Not more than 20% • MFIs in the RuMEPP priority provinces that do not pass the PAR requirement may still be considered for accreditation if they have a CAR of not less than 20% and a PDR of not more than 10%

25. Interest Rates (Starting Nov. 23, 2007) MICRO-LEAD Minimum - Maximum - MICRO-LOCAL Minimum - Maximum - MICRO-LEAP Cooperatives - Other Conduits - 9.5% p.a. 9.7% p.a. 9.5% p.a. 11.0% p.a. 10.5% p.a. 11.0% p.a.

26. Service Fees

27. Pass-on Rate Incentive • Incentive is given to MFI conduits whose average monthly pass-on rate, inclusive of service fees, is kept at • 2.5%for retailers • 1.2%for wholesalers • Evaluation and availment processing fees, which are deducted from MFI’s loan proceeds, will be returned in a form of a rebate upon credit line renewal.

28. Documentary Requirements Upon Application/Line Accreditation Accomplished Loan Application Form (SBGFC form) Notarized Client Information Sheet with 1x1 recent ID picture of each principal stockholder/officer (SBGFC form) Business registration papers Board Resolution to borrow and on authorized signatories with specimen signature/s Audited Financial Statements for the past 3 years, if applicable Latest interim Financial Statements (not more than 6 months old)

29. Documentary Requirements • Organizational Structure/Background Information • Schedule of borrowings including repayment term, collateral cover and credit status • Certificate of Good Standing from creditors (if applicable) • Aging of loan portfolio • Schedules of the following: • Past due loans • Microfinance PAR, if applicable • Loan-loss provisioning

30. Documentary Requirements Subsequent Loan Release Requirements • Updated financial statements (with MF-PAR schedule, if applicable) • Strictly not more than 2 months old from date of loan availment and should reflect past 20% availment • Sub-borrower validation* report, to be done by SBGFC Monitoring Dept. (for conduits with at least P2.0 Million credit line only) • Large MFIs – every 20% or P5 Million availment, whichever is higher • Medium-sized MFIs – every 20% or P1.5 Million availment, whichever is higher • Lower qualification conduits – every 20% or P2.0 Million availment, whichever is higher *Validation of at least 20% of the number of sub-borrowers based on the liquidation report submitted by the MFI or 20 sub-borrowers, whichever is lower.

31. Documentary Requirements Subsequent Loan Release Requirements • Simple listing of end-borrowers using SBGFCformat • With proof and details of prior disbursements if credit line is less than P2.0 Million • Other pre-release documents for succeeding availments, as required by SBGFC

32. SBC Offices HEAD OFFICE 17th & 18th Floors 139 Corporate Center 139 Valero St. Salcedo Village, Makati City Tel. No. : 751-1888 Fax No. : 894-1677 or 8135726 Website : www.sbgfc.org.ph LUZON OFFICES LA UNION DESK OFFICE La Union Trade Center City Hall Complex Quezon Ave. San Fernando City, La Union Telefax No.: (072) 242-7647 BICOL DESK OFFICE FEDMACSI Bldg., Panganiban Drive Naga City Telefax No.: (054) 473-9975 ISABELA DESK OFFICE Rm. 4 2nd Floor OH Commercial Bldg. San Fermin, Cauayan City Tel. No. : (078) 652-1964

33. SBC Offices VISAYAS OFFICES MINDANAO OFFICES VISAYAS AREA OFFICE Unit 802-B Keppel Center Ayala, Cebu City Tel. No. : (032) 232 – 1200 Fax No. : (032) 234 – 4500 MINDANAO AREA OFFICE 7th Floor Unit 76 Landco Corporate Center JP Laurel Ave. Bajada, Davao City Tel. No. : (082) 221 – 1488 Fax No. : (082) 221 – 0858 ILOILO DESK OFFICE c/o DTI Region 6 Mezzanine Floor DTI Bldg., JM Basa cor. Peralta St., Iloilo City Tel. No. : (033) 335-0060 Fax No. : (033) 335-0083 GENERAL SANTOS DESK OFFICE c/o DTI-General Santos City Osmena South St., Gen. Santos City Tel. No. : (083) 552-8385 Fax No. : (083) 553-1032 TACLOBAN DESK OFFICE c/o DTI-Region 8 Nacida Bldg. Government Center, Pawing Palo, Leyte Telefax No. : (053) 323-8385 CAGAYAN DE ORO DESK OFFICE c/o DTI Region 10 Corrales cor. Luna St. Cagayan de Oro City Tel. No. : (088) 231-5703

34. Microfinance gives a poor person a chance to take destiny in his hands and get out of poverty with his efforts.

35. “… the rural micro entrepreneurs are the innovators, the risk-takers, the hardworkers and the heroes. All that we can do is to improve their access to the means they can use to achieve their own ends.” – Professor Malcolm Harper

36. Thank you.