Micro entrepreneurs can now avail themselves of higher loan amounts from banks, with the issuance of a circular last December 28 by the Bangko Sentral ng Pilipinas (BSP) raising the ceiling on micro-finance credit.
BSP Circular No. 744 added “microenterprise loan plus” or “microfinance plus” to the types of microfinance loans that banks may extend to their clients.
Maximum loan amount from Microfinance plus credit is P300,000, double that of regular microfinance loans which cannot exceed P150,000.
In order to qualify for the higher loans offered by the program, borrowers should have a track record of at least two microfinance loan cycles in the P50,000 and P150 thousand range. They should also be able to demonstrate their increasing need for financing and increased capacity to pay this. Borrowers should also have a savings account.
The microfinance plus program was introduced in recognition of the success of a growing number of successful micro-entrepreneurs who require bigger loans, according to BSP Deputy Governor Nestor A. Espenilla, Jr.
A microfinance loan is a “small loan granted to basic sectors, on the basis of the borrower’s cash flow, and other loans granted to the poor and low-income households to enable them to raise their income levels and improve their living standards,” the annex read.
Aside from microfinance loans, banks may also extend housing microfinance loans and micro-agri loans.
A housing microfinance loan, capped at P300,000, may be used for home improvements, house construction, and house and/or lot acquisition.
A micro-agri loan, meanwhile, is a “short-term loan granted for farming activities, agribusiness, and agri-related fixed assets, among others…”
The BSP said that as of June 2011, banks with microfinance operations lent over P7 billion to over 963,000 borrowers, or an average of P7,260.00 per micro entrepreneur.
Adapted from: Businessworld Online, December 29, 2011