Govt lender to small business fails to meet 1st-quarter target

By Dennis D. Estopace
Reporter

THE government firm lending to small and medium businesses missed hitting its target for the first three months of the year as banks began reining in money and industry players remained conservative borrowers.

The Small Business Guarantee and Finance Corp. (SBCorp.) announced on Wednesday that total loan origination was almost P100-million short of its P1-billion target for the first quarter of this year.

Nonetheless, it surpassed its last year’s performance of P812.8 million, lending P895.7 million in the three-month period to clients among an estimated 800,000 small and medium businesses.

SBCorp., a government-owned and -controlled corporation (GOCC) under the trade and industry department, posted increases in its wholesale and retail lending programs during the first quarter.

As of end-March, the lender released a total of P657.7 million for wholesale lending, as against the P625.9-million it released during the same quarter last year.

The bulk of this money went to borrowers in Luzon (71.1 percent) while those in the Visayas (15.2 percent) and Mindanao (13.7 percent) borrowed a cumulative total of under P100 million.

While wholesale lending to Luzon went up in the first quarter, money released to the Visayas went down to P99.8 million from P109.7 million SBCorp. released in the same period last year.

Likewise, money released to Mindanao went down to P90 million from the P126.2-million lending in the first three months of last year.

Luzon also got higher retail lending share in the first quarter at P112.7 million from P95 million in the same period last year, while the Visayas went down by P100,000 from P19.7 million in the first quarter of 2005. Mindanao retail loan origination dropped to P1.9 million from P3.1 million in the same period last year.

SBCorp. chairman and chief executive Zorayda Amelia C. Alonzo said the decrease could be attributed to their enhancement of system of processing loans and scrutinizing business proposals.

The performance, to note, of SBCorp.’s credit guarantee program, pulled down the GOCC’s attempt to hit its target for the quarter. From P57.3 million it guaranteed in the first quarter of 2005, SBCorp. was only able to guarantee P36.3 million this year.

Likewise, some small and medium businesses have gone into default, “and this is a normal occurrence in the market,” Alonzo added. “Some businesses close; but new ones come into the market,” she told BusinessMirror.

The first quarter was also marked by consolidation as small and medium-scale businesses gear up for the impact of oil prices into their operational funds.

Microfinance lending, nonetheless, shot up to P67.2 million in the first quarter from P6.7 million in the same period last year, with Luzon getting a bigger share (82.2 percent), followed by the Visayas (11.4 percent), and Mindanao (6.4 percent).

Eleven nongovernment organizations and 11 cooperatives shared with five rural banks in the lending for microfinance projects but with the latter contributing higher at 62 percent of the total.

The increase in microfinance lending came after the facility was redesigned last year.

Alonzo, a former investment banker, said it appears the redesign worked since the facility generated more partners and provided access to even remote and poor areas in the country.

http://www.businessmirror.com.ph/0525/eco06.php