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S M E U nified L ending O pportunities for N ational G rowth

S M E U nified L ending O pportunities for N ational G rowth. What is SULONG? Support of the National SME Development Plan GFIs collaborated to design a uniform lending program GFIs shall apply simplified and standardized lending procedures and

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S M E U nified L ending O pportunities for N ational G rowth

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  1. S M E U nified L ending O pportunities for N ational G rowth

  2. What is SULONG? • Support of the National SME Development Plan • GFIs collaborated to design a uniform lending program • GFIs shall apply simplified and standardized lending procedures and guidelines

  3. Who are the participating GFIs? • Land Bank of the Philippines • Development Bank of the Philippines • Small Business Corporation (SBGFC) • Social Security Services • Phil. Export-Import Credit Agency • Quendan Credit and Rural Corp. • Gov’t Service and Insurance Services • National Livelihood Support Fund • People’s Credit & Finance Corp.

  4. PROGRAM OBJECTIVES: • To simplify and standardize the lending procedures of GFIs, thereby enhancing the SME’s access to funds • To shorten the list of documentary requirements to further facilitate the lending process • To create a wider, borderless financing system that will afford the SMEs greater access to short and long-term funds • To lower the effective cost of borrowings by SMEs and liberalize the requirements

  5. RETAIL LOANS • Who qualifies to borrow? • 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 P100 million excluding the value of the land.

  6. What type of loans may be funded? • For short-term loans, the enterpreneur may tap the program either for export financing (export packing credit) or a credit line for temporary working capital • For long-term loans, SMEs may apply for loans for permanent working capital , to purchase equipment, or to construct a building/warehouse.

  7. Terms of Financing: • For short-term loans, the program can fund up to 70% of the value of LC/PO (export packing), or 70% of working capital requirement, maximum of P5.0 million. • For long-term loans, 80% of the incremental project cost, maximum of P5.0 million.

  8. What is the repayment term? • For short-term loans, a maximum of one (1) year • For long-term loans, a maximum of five (5) years, inclusive of maximum one (1) year grace period on principal monthly amortiza- tion.

  9. Are collaterals required? If so, what assets are acceptable? Yes, a borrower must put up a collateral to secure the loan. However, the program will not decline a loan only on the basis of inadequate collateral. However, the borrower must be willing to pledge all available business and personal assets, including assets to be acquired from the loan, to secure the borrowing.

  10. ACCEPTABLE COLLATERALS: • Post-dated checks • REM/ Chattel Mortgage • Assignment of Life Insurance • Franchise • Corporate Guarantee • Assignment of Lease Rights

  11. INTEREST RATES: as of March, 2005 Short-term loans - 10.2%p.a. Up to 3-year term - 14.2%p.a. fixed 3 to 5-year term - 15.2%p.a. fixed

  12. What Financial Ratio/Hurdles • must a borrower meet? • Debt-equity ratio must be 80:20 • For franchisees, DE must be 70:30 • Must show positive income for the preceding year Other ratios will still be examined but hurdles will depend on industry performance.

  13. FEES: • one-time application and evaluation fee of P2,000 for every P1.0 million • Front-end fee of 1/2 of 1% • Commitment fee of 0.125% on unavailed balance

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