DBP Microfinance Program

DEVELOPMENT BANK OF THE PHILIPPINES (DBP)
Head Office: Sen. Gil J. Puyat Avenue, cor. Makati Avenue, Makati City

Program Title: MICROFINANCE PROGRAM

Program Objectives:
* To support the government’s efforts to alleviate poverty and attain sustainable economic growth and development in
partnership with microfinance institutions (MFIs).
* To hasten the development and growth of MFIs as well as enhance their efficiency and effectiveness as conduits of
development funds for micro-enterprise development by providing them direct and convenient access to DBP’s credit and technical assistance specially designed to support their investment projects and capacity-building programs.
* To facilitate the access of micro-investment enterprises and the entrepreneurial poor to formal credit and banking services, that include but are not limited to training, market assistance, business consultancy, whenever possible, to hasten their growth and development.

Eligible Borrower-MFIs:

* Bank MFIs
o Microfinance Banks – banks organized primarily for and granted a license by the BSP as microfinance banks.
o Microfinance-oriented Banks – banks which diversified into microfinance with 50% or more of their total loan portfolio devoted to microfinance.
o Banks authorized by the BSP to diversify into microfinance which MF loan portfolio has yet to attain the 50%
requirement to be considered microfinance-oriented banks, and their existing or proposed principal transaction with the DBP is microfinance.

* Non-Bank MFIs
o Non-government organization (NGO) with successful microfinance operations for 3 years or more for all types of MFC loans.
o Non-Government organization (NGO) with successful microfinance operations for a minimum of one (1) year but less than three (3) years for capacity-building loans only.
o Cooperatives – primarily savings and credit cooperatives with successful microfinance operation for a minimum of one year.

Minimum Risk Acceptance Criteria: MFIs should at least get Rating 3 (Satisfactory) of the NCC Performance Standards to be considered, but should get a weighted score of at least 75% to avail of the Wholesale Re-lending and Business Development loans.

However, for Capacity Building loans, MFIs with weighted score of at least 70% may be considered depending on the result of MFC’s due diligence on the applicant MFIs.

Credit and Technical Assistance Facilities:

MFC shall provide the following:
* Credit Facilities and Loan Purpose
o Wholesale loans for re-lending to micro-enterprise/end-users intended for:
– Fixed asset acquisition and working capital
– Home improvement and housing
– Solar projects
o Direct Loans to MFIs
– Business development loans – intended for capital expenditures and/or working capital for expansion of MFI’s operations directly related to microfinance services
– Capacity-building loans – intended for institutional strengthening (e.g. installation of MIS); professional development for MFI board, management and staff
* Technical Assistance
o Marketing support for microentrepreneurs
o Business development advisory

Terms/Requirements:

Loan Amount: The loan amount will always depend on the project funding requirements of the MFIs.

Interest Rates:
* Wholesale loans: Market rate
* Business Development loans: Market rate
* Capacity-Building loans: Lower than market rate, but not lower than cost of funds plus 2% administrative cost

other Fees: All other fees and taxes such as front-end fee, commitment fee, GRT, and other fees related to the microfinance transactions with the Bank shall be for the account of the borrower-MFIs.

Tenor:
* Wholesale Loans – Re-lending
o Credit Lines – maximum of 1 year
o Term Loans – maximum of 3 years, inclusive of one (1) year grace period. -30-
* Business Development Loans – Maximum of five (5) years, inclusive of one year grace period.
* Capacity-Building Loans – Maximum of 5 years, inclusive of one (1) year grace period

Equity: For business development and capacity-building loans, borrower MFIs will be required a minimum equity participation of 20%.

Collateral: Loans may be unsecured or where necessary partially secured which may be covered by REM, CHM, Stand-by LC, Hold out on Deposit, and other forms of collateral acceptable to the Bank.

Other Conditions:
* Loans extended under this program shall be exempted from the bank’s requirement of 100% end-use verification.
* MFI borrowers shall execute a deed of undertaking stipulating that DBP funds shall not be relent for immoral and/or illegal activities.
* Where necessary, MFI applicants may be required the following:
o Submission of Post-dated checks
o Assignment of Promissory Notes of sub-borrowers
o Joint and Several Signatures (JSS) of principal officers of MFIs
o Make DBP as major depository bank
* MFI-borrower shall submit to DBP reports required by regulatory authorities for clients with Barangay Micro Business Enterprises (BMBE) authority.

Performance-Based Incentives:
To encourage MFI borrowers towards quality portfolio and wider market reach, performance-based incentives will be available.
* Higher credit lines for both re-lending and business development loans
* Lower than market interest rates
* Longer terms or repayment
* Waiver of applicable fees
* Combination of any of the above

Delivery System: Loan application may be submitted to the Microfinance Resource Center (MFC) at the Head Office in Makati or in any of the Area Management Offices and branches of the Bank.

Contact Details:

SVP Brillo L. Reynes
Phone: (632) 817.0473
Head, Small & Medium Enterprise Department

SM Romeo B. Carandang
Phone: (632) 892.2357
Head, SME Unit Trunkline: 818.9511/9611 loc. 2546

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