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.

The following are acceptable collateral: postdated checks, registered/unregistered real estate mortgage (REM)/chattel mortgage (CHM), or the assignment of life insurance. In addition, corporate guarantee and assignment of lease rights may be considered for franchisees.

If the loan purpose is for export packing credit, a borrower may assign his LC/PO or sales invoice.

A one-time application and evaluation fee of P2,000 for every P1M, a front-end fee of 1% of approved loan, and a commitment fee of 0.125% of the unavailed balance for long term loans.

This will depend on the government financial institution (GFI). For example, Small Business (SB) Corp. can process the loan within two weeks after receipt of complete documents. 

Guarantees Program
This facility was designed to encourage financial institutions to lend to SMEs by providing guarantee cover up to a maximum of 85% on loans of qualified entrepreneurs. The guarantee primarily works as a collateral substitute or as a collateral supplement.

SME-GEAR (Guarantee for Gearing-up Enterprises without collateral) is a credit-guarantee facility for viable micro, small, and medium (MSMEs) who do not have hard collateral to secure their loans with accredited financial institutions (AFI). SME-GEAR is intended for borrowers who at their present stage of operations are not yet able to offer collateral security for their loan.

SME-GROW (Guarantee for Growing Enterprises with partial collateral) is a credit-guarantee facility for viable MSMEs that can partially provide hard collateral to secure loans with AFI. SME-GROW is intended to assist a borrower in its business expansion by way of the increased financing that can be granted by the AFI in view of the guarantee cover on the unsecured portion of the loan.

SME-GAIN (Guarantee for Gainful Enterprises with a available collateral) is a credit-guarantee facility for viable MSMEs that have available hard collateral to partially or fully secure loans with AFI. SME-GAIN is intended to assist mezzanine enterprises access loans from AFIs who need the guarantee cover to address temporary risk considerations such as insufficient credit track record of the borrower, nature of industry involved or fluctuations in the collateral market, among others.

Lending Programs

A. Wholesale Lending Programs
SME-Funding Access for Short-term (FAST) Loans is a wholesale funding via rediscounting of SME loans of accredited financial institutions.

SME-Funding for Investment in Regional Markets (FIRM) is a wholesale medium-term project funding channeled through accredited financial institutions as conduits to SMEs.

B. Retail Lending Programs 
SME-Financing Reach for Exporters through Network Development (FRIEND) is a direct lending to exporters with Letters of Credit, who are endorsed by their industry associations.

SME-Financing for Receivables of Suppliers’ Transactions (FIRST) is a direct lending to suppliers of domestic firms with proven track record and management stability, where the object of credit is the supplier’s sales invoice for goods/services delivered;

SME-Financing for Organizationally Competent and Excellent Franchise Businesses (FORCE) is a medium-term direct lending to franchisees of home-grown franchise firms that are members of industry associations. It is intended for the start-up or expansion of franchises.

SME-Financing for Variable Business Expansions (FLEXIBLE), which was formerly called SME GUIDE, is a direct lending facility for domestic enterprises to sustain, expand, or improve their business operations.

SME-Financing for Enterprising and Able Start-ups with Innovative Business Lines (FEASIBLE) is a direct lending facility for start-up domestic entrepreneurs.

Microfinance Facilities
MICRO-LEAD (Large Micro Finance-Oriented Institutions)
MICRO-LEAD (Medium Micro Finance-oriented Institutions)
MICRO-LOCAL (MSME-Oriented Rural Banks)
MICRO-LEAP (Community Cooperatives)
MICRO-LEAP (Lower Qualification Conduits)

The above facilities comprise  the recently re-designed SME FEEL, a microfinancing facility of SB Corp.  These were differentiated based on the category/size and nature of operation of the conduit.  Here, large, focused and well-established microfinance institutions will be allowed higher loan limits, but will have to pass through more stringent eligibility criteria.
 

The debt-equity ratio must at most be 80:20 after the loan. For franchisees, the required ratio is 70:30.

 

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 Standardized Unified Lending Program by GFIs for SMEs and Standardized Accreditation Program by GFIs for rural and thrift banks.
 

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 three to five years.

For short-term loans, the program can fund up to 70% of the value of the letter of credit (LC)/Purchase Order (PO)--export packing--or 70% of working capital requirement--temporary working capital--maximum of P5M; for long-term loans, 80% of the incremental project cost, maximum of P5M.

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