Despite the key role they play in strengthening the economy, lack of access to financing remains as the biggest roadblock for the growth of Micro, Small and Medium Enterprises (MSMEs) in the country.
“The existing requirements for credit do not consider the nature and stature of these micro and small businesses,” said Senator Bam Aquino, chairman of the Committee on Trade Commerce and Entrepreneurship.
The senator pointed out that current prerequisites for financing are marginalizing the MSME sector, which accounts for 99.6% of all enterprise in the country and employs about 62% of the workforce in the country.
To address this, Aquino has filed Senate Bill No. 2218 expanding and strengthening the current Credit Surety Fund (CSF) program of the Bangko Sentral ng Pilipinas (BSP) to enable it to extend financial help to more micro and small enterprises all over the country.
“The CSF is seen as an effective program to address the financing gap that is affecting many entrepreneurs in the country,” Aquino said, referring to the BSP’s credit enhancement scheme that allows MSMEs, which are members of cooperatives to borrow from banks without collateral.
He emphasized that CSF must be supported by passing laws that will augment and enable it to help more small businesses who lack access to capital and other assistance.
“With our bill, we will institutionalize CSF and give it more funding to enable it to provide help to more MSMEs,” Aquino added.
The BSP recently launched three CSF programs in Cagayan de Oro, Aklan, and Tarlac, bringing the total number of credit surety funds established nationwide to 29 from 26 in the previous year.
In addition, the bill is aimed at aimed at building the capability of MSMEs, cooperatives and non-government organizations in the areas of credit evaluation, loan and risk management, and good governance.
Also, the bill seeks to enhance the MSMEs’ credit worthiness and broaden access to credit facilities, and sustain the continuous flow of credit in the countryside.
“This will generate more employment and alleviate poverty through increased investments and economic activities,” added Aquino, stressing that the challenge is to grow the micro businesses into small enterprises and the small enterprises to medium enterprises.
“If it this is done, growth would not only be for the few rich, rather, it would be for everyone, even to the poorest Filipino,” Aquino said.