Credit Surety Fund

Bam fulfills campaign promise to alleviate poverty through Entrepreneurship, Employment and Education

In 2013, Sen. Bam Aquino ran with a campaign promise of uplifting lives of Filipino families and fighting poverty through education, employment, and entrepreneurship or the 3Es.

 In his first three years, Sen. Bam Aquino laid the foundation for the growth of micro and small businesses, improved access to financing for entrepreneurs, lowered logistics costs for imported and exported goods, and ensured the financial literacy of generations to come.

 During the 16th Congress, he worked for the passage of 14 laws in line with his commitment to the Filipino people. Nine of these laws were aligned with his advocacy to build an effective support network for local business, particularly the micro, small and medium enterprises (MSMEs), and promote ease of doing business.

 These are the landmark Philippine Competition Act, Go Negosyo Act, Foreign Ships Co-Loading Act or Amendments to the Cabotage Policy, Youth Entrepreneurship Act, Microfinance NGOs Act, Credit Surety Act, Lemon Law, the Customs Modernization and Tarrif Act, and the Department of Information and Communication Technology (DICT) Act.

 After gathering dust for more than two decades, the Philippine Competition Act was finally enacted into law thanks to Sen. Bam Aquino’s efforts as co-author and principal sponsor in the Senate.

 Dubbed by Sen. Bam as a “historic, game-changing legislation for the economy”, the Philippine Competition Act or Republic Act 10667 provides a level-playing field for all businesses and penalizes bad market behavior and abuse of dominant positions.

 The law expected to improve the quality and lower the prices of goods and services by eliminating cartels, and penalizing anti-competitive agreements and abuses of dominant players in the market.

 The Go Negosyo Act, the first law passed by Sen. Bam in the 16th Congress, mandates the establishment of Negosyo Centers in all municipalities, cities and provinces that will assist micro, small and medium enterprises in the country.

 “This is a part of our pledge to work for the development of MSMEs to help create jobs and livelihood for many Filipinos and spur the country’s economy,” said Sen. Bam, the youngest senator in the 16th Congress.

 There are already 200 Negosyo Centers catering to the needs of struggling entrepreneurs in the country, from returning OFWs and carinderia owners to farmers and social entrepreneurs.

 As chairman of the Committee on Trade, Commerce and Entrepreneurship, he also initiated investigations into the slow and expensive Internet in the country and the congestion in the Port of Manila.

 The investigation produced several triumphs that will help improve the Internet service in the country, including the much-awaited IP Peering between Globe and PLDT.

 In the 17th Congress, he is expected to head the Committee on Education, hoping to elevate the quality of Philippine education, particularly in our public schools to global standards so that more young Filipinos can build a brighter future for themselves and their family.

 Sen. Bam has already filed four education-related measures such as the Free Education in State Colleges and Universities (SUCs), Free Education for Children of Public School Teachers’ Children, Abot Alam, and the Trabaho Center in Schools bills.

 Even with education on his mind, he continues to push for his social entrepreneurship advocacy and is still building a robust support system for small business with the filing of bills to support Small Business Tax Reform, Startups, and Social Enterprises, among others.

 Sen. Bam is relentless in his pursuit to fulfill his campaign promise of the 3Es to achieve inclusive growth and help Filipino families overcome poverty.

Bam’s Loan Guarantee for Small Biz Program Now a Law

Small and medium enterprises will now have additional access to credit with the approval of the Credit Surety Fund (CSF) Cooperative Act into law, according to Sen. Bam Aquino.

Aquino, author and sponsor of the Senate version of the measure, said that Republic Act 10744 would institutionalize the CSF program of the Bangko Sentral ng Pilipinas (BSP), which targets the missing middle or loan requirements ranging from P200,000 to P5 million.

“When it comes to micro, we have the cooperatives and the microfinance institutions. When it comes to the medium and large, our banks are actually quite willing to provide loans,” said Aquino, chairman of the Committee on Trade, Commerce and Entrepreneurship.

“This small enterprise space that we perceive to still be a missing middle will, hopefully, be catered to through the Credit Surety Fund Cooperative Act,” he added.

According to Aquino, the smaller enterprise’s loan needs that range from 500 thousand pesos to 5 million pesos are too large for microfinance institutions but still perceived to be too risky for banks, which, most of the time, ask for collateral.

Through this, the BSP, local government units, Department of Finance, Cooperative Development Authority, cooperatives, microfinance NGOs and government financing institutions (GFIs) will join hands to create an initial fund.

This fund may be used by entrepreneurs and businessmen belonging to cooperatives and microfinance NGOs, which helped establish it, as collateral or guarantee for bank loans.  

“So hopefully we’ll be able to provide loans at this space with comparable rates completing the whole financial inclusion supply chain,” said Sen. Bam.

Furthermore, the new law will help build 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.

The Credit Surety Fund Cooperative Act is the tenth law of Aquino in the 16th Congress.

He is a former social entrepreneur, who worked on livelihood and business development projects in poor communities for a long time before running for a senate seat in 2012.

Republic Act No. 10744: Credit Surety Fund Act of 2014

For a developing country like the Philippines, majority of its businesses come from the Micro, Small and Medium Enterprises (MSMEs). As of 2011, the Department of Trade and Industry (DTI) accounts that 99.6% are MSMEs, employing about 62% of the Philippine workforce. With that, the sector is a major stakeholder in the economic development of the people.

Yet, one of the roadblocks for the continued growth of the MSMEs is access to financing. The existing requirements for credit do not consider the nature and stature of these micro and small businesses. Current prerequisites for financing are marginalizing the sector, which provides jobs and livelihood to the majority of Filipinos.

It is high time that a structure of extension of credit for MSMEs be developed to further grow micro and small enterprises all over the country.

Thus, the bill proposes the establishment of the Credit Surety Fund (CSF) mechanism to enhance the credit worthiness of MSMEs, broa~en their 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.

The challenge is to grow micro businesses into small enterprises and small enterprises to medium enterprises. If this challenge is addressed, we would better enable the kind of economic growth that not only benefits the few rich, but also the majority of the people, including the poorest Filipino.

In view of the foregoing, the approval of this bill is earnestly sought.

 

PDFicon DOWNLOAD RA 10744

Easier Credit Access to Fuel Growth of MSMEs – Sen. Bam

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.

 

 

Scroll to top