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

Program Title: ONE TOWN ONE PRODUCT (OTOP) CREDIT FACILITY

One Town One Product  (OTOP) Credit  Facility 1

Program Objectives:
* To support the National government’s poverty alleviation efforts in terms of job and income generation;
* To sustain DBP’s developmental mandate by encouraging entrepreneurship in the countryside using locally available raw materials and inherent human resources, skills and talents, thus, spurring economic activity and job opportunities in each locality;
* To reaffirm the Bank’s commitment to be a catalyst for countryside development by empowering the country’s MSMEs
through the provision of easy access to credit and technical assistance.

Fund Allocation: A nationwide funding allocation of P2.0 Billion to implement the DBP-DTI OTOP Memorandum of Agreement.

Eligible Borrowers: LGUs, OFWs, and MSMEs with existing or start-up OTOP projects and other income-generating undertakings highly supportive of the OTOP Program.

* For MSMEs, loan proposals shall be favorably endorsed by the
* Department of Trade and Industry’s Regional Operations and
* Development Group (RODG) or any of DTI’s Regional or
* Provincial Offices;
* For land-based OFWs; priority shall be given to those endorsed by the National Reintegration Center;
* For sea-based OFWs, priority shall be given to loan proposals endorsed by Magsaysay Maritime Corp., Nippon Yusen Kaisam or other DBP partner agencies.

Loan Purposes:
* All project-related expenditures;
* For LGUs, funding may be for common service facilities (including but not limited to, farm to road networks, markets, pasalubong centers, OTOP display centers, terminals, warehousing facilities, machineries and equipment, etc.) for the benefit of the OTOP entrepreneurs, in the locality. LGUs may use loan proceeds for re-lending to DTI-assisted OTOP entrepreneurs.

Terms/Requirements:

Loan Amount:
* Up to 90% of project cost, depending on fund source and borrowing capacity;
* For LGUs, loan amount shall be based on limitations borrowings set forth by the Local Government Code.

Funding Source: IGLF/ODA Funds / Bank Funds, depending on project eligibility

Interest Rate:
* 8% to 10% per annum; fixed for 3 years; depending on Borrower Risk Rating (BRR);
* With premium of 1% for loans over 3 years up to 5 years and 2% for loans over 5 years.

Maturity / Repayment:
Term of the loan shall be based on projected cash flows, but not to exceed:

* 180 days for export packing credit
* One (1) year for production credit
* Five (50 years for permanent working capital
* Ten (10) years for capital expenditures
* Maximum grace period shall not exceed 1 year for working capital and 3 years for fixed asset acquisition/building
construction.

Mode of Payment: Loan shall be payable monthly, quarterly or semi-annually depending on the cash flow of the project.

Collateral:
The loan shall be secured by any or a combination of the following:
* Real Estate/Chattel Mortgage
* Hold-out on deposit
* For LGUs, Deed of Assignment of specified portion of IRA
* Co-marketship; Joint and Solidary Signature
* Assignment of project income, purchase orders, export receivables, etc.
* Guarantee from PhilEXIM / SBGFC / LGUGC /endorsing organization.

The strength of cash flow and cash capture mechanism shall be the overriding considerations in requesting waiver of the collateral requirement.

Minimum Risk Acceptance Criteria:
* Favorable endorsement by the Department of Trade and Industry’s Regional Operations and Development Group or any of DTI’s Regional/Provincial Offices;
* For LGUs, common facilities/infrastructures to be constructed are preferably components of DBP’s Sustainable Logistics Development chain and are directly supportive of the OTOPs in their locality with the objective of providing a conducive environment for entrepreneurship to thrive;
* For OFWs, favorable endorsement from DBP partner agencies to establish employment status and capacity to pay;
* The OTOP proponent has a ready and clearly established market for its products/services that would ensure a stable cash flow for loan repayment;
* DBP shall finance projects which are technically, financially, economically, and environmentally viable.

Basic Requirements:
* Application Letter
* Customer Information Report (DBP Form)
* Confidential Information Sheet (DBP Form)
* DTI endorsement of project
* Business Plans
* Audited Financial Statement (F/S) for the last 3 years for going concerns and Pre-operating Balance Sheet/cashflow signed by the firm’s authorized signatory for start-up projects(for medium sized entrepreneurs); In the case of Micro and Small Entrepreneurs/OFWs, if audited F/S is unavailable, In-House Financial Statements duly certified by the firm’s Accountant/Comptroller will be accepted.
* Income Tax Returns for the last 3 years, if applicable
* Business Registration Permit; Articles of Incorporation, By-laws
* Documents authorizing the borrowing and designating the authorized signatories for the loan.

Other Requirements for OFWs:
* National Reintegration Center for OFW, Magsaysay Maritime Corporation Nippon Yusen Kaisa, or other DBP partner
agencies’ endorsement of OFWs
* OFW availees shall be required to open a DBP EC Card for payment of loan authorizations.

Other Requirements for LGUs:
* Resolution passed by the appropriate Sanggunian authorizing the CLE to negotiate and sign documents on behalf of the LGU relative to the loan with DBP
* Statement of IRA (last 10 years) duly certified by the CLE or Treasurer
* Socio-economic profile of the LGU
* Certification of the Treasurer on current status of existing loans and compliance to 20% borrowing cap
* Certification of the Bureau of Local Government Finance, Department of Finance on the LGU’s Debt Service Ceiling for the current year