BSP wants banks to lend more to MSMEs
Small businesses with guaranteed loans will now be treated with lower risk premiums.
The Bangko Sentral ng Pilipinas (BSP) has pitched in its contribution towards helping more micro, small, and medium enterprises (MSMEs) to borrow from banks.
In a statement, the central bank announced that MSMEs with loans backed by credit surety fund (CSF) cooperatives — a guaranty system composed of groups of small firms — will carry just a 20% risk weight, down from the 75% risk previously attached to all kinds of small business loans.
“This policy intends to facilitate the increased flow of funds to MSMEs that will translate to the further growth of the sector and of the domestic economy,” the BSP said.
This likewise highlights the central bank’s CSF program, which gathers MSMEs located in one city or province to create their own cooperative which stands as the guarantor for them to get their loan applications from big banks approved.
There might be no more need to post collateral with the lower risk priced in.