Loan access facilitated by credit surety fund support

More cooperatives and their micro, small and medium enterprises (MSME) members can gain easier access to bank credit even without hard collaterals and credit track record, as the Bangko Sentral ng Pilipinas (BSP) launches credit surety fund (CSF) facilities in more cities and provinces across the country.

Latest data from the BSP Financial Inclusion Office show that there are 43 CSF cooperatives registered with the Cooperative Development Authority (CDA) as of 30 June 2024.

Of the total, almost half, or 22 registered CSF cooperatives are located in Luzon, while 14 are in Mindanao and seven are in the Visayas.

Pooled fund

The CSF is a fund pooled from contributions of participating cooperatives/non-governmental organizations, a local government unit, and partner institutions which provides a maximum surety cover of 80 percent to loans granted by banks to MSMEs which serves as an alternative to hard collaterals.

This, as banks generally require hard collaterals when extending loans, a requirement that some MSMEs often find difficult to comply with.

This year, the BSP has procured a third-party training service provider to develop a course for CSF cooperatives which includes a training of trainer’s component.

The BSP met with the provider this month, and the project is expected to be completed within the year.