By Luz Wendy T. Noble, Reporter
The central bank on Friday unveiled projects that will expand credit accessibility for small businesses next year, including a nationwide survey to gauge their needs and the development of standardized loan applications for the sector.
“We all recognize the critical role of MSMEs (micro-, small and medium-sized enterprise) as drivers of economic growth. The sector, however, has been constrained with access to formal finance,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in an online briefing.
Mr. Diokno said they have identified constraints to lending and initiated plans to address pain points for banks and MSMEs.
In 2021, the BSP will conduct a nationwide MSME survey meant to address the information gap in the sector.
“Banks have generally viewed MSMEs as unbankable due to limited information on their market operations and viability, which lead to perceptions of high risks,” Mr. Diokno said.
Getting financing from a bank requires collateral and credit history to assess credit worthiness. Most MSMEs do not have these, which may prevent them from pursuing credit applications.
In this regard, Mr. Diokno said the survey, which will be rolled out in September 2021, aims to provide deeper insights into the MSME market to allow financial institutions to better gauge their needs.
“The demand-side survey is expected to generate more granular data on MSME access to finance; and new insights on MSME preferences and practices in managing their finances,” Mr. Diokno said.
The survey is co-initiated and funded by the Asian Development Bank. The multi-lateral agency was responsible for publishing the terms of reference for the engagement of the research firm for the project.
Meanwhile, Mr. Diokno said the standard, simplified loan forms for MSMEs, together with policies and guidelines, are also expected to be created in 2021. Industry adoption is expected to start by 2022.
“This is also intended to improve banks’ risk assessment and hasten turnaround time for loan applications,” Mr. Diokno said.
Earlier, the BSP also unveiled its plans to streamline the process for supply chain financing of MSMEs, allowing suppliers to credit access more easily, provided they are verified suppliers of large firms.
MSMEs make up about 99% of the roughly one million registered businesses in 2018, based on data from the Department of Trade and Industry.
Despite this, credit extended to the sector is only about 2.47% or P208.201 billion of the banks’ total loanable funds in the first quarter. This is lower than the 10% required under Republic Act No. 6977 or the Magna Carta for MSMEs.