There is another good news for all interested and qualified MSMEs, NGOs and co-ops. If you want to replenish your dwindling capital or you want to expand your credit services or probably, you have a new business venture but does not have sufficient resources to make it a reality, then the Credit Surety Fund or CSF is here to serve you and could potentially provide for all those needs. In order to avail of their offer however, your organization would have to become a member of the CSF.
Let me introduce to you what CSF is all about. Bangko Sentral ng Pilipinas (BSP) claimed to have conceptualized this idea way back in 2008 initially to give MSMEs and co-ops easier access to credit and a better alternative to those loan providers offering staggering high interest rates. It must have been successful because the CSF eventually became a regular program of BSP.
From what I’ve heard, the CSF concept came about when the BSP found out that there is a difficulty of MSMEs which includes co-ops in obtaining loans from banks despite the fact that banks are mandated to provide a loan portfolio for the sector. There are several factors such as; lack of collateral, lack of credit knowledge and lack of credit track record. I suspect, MSMEs are unable to comply with the voluminous documentary requirements. Thus, the CSF was born.
Furthermore, there is a need to do some convincing and a little marketing strategy because BSP will not be providing the cash requirement needed for the fund. It will come from the co-ops themselves, from the LGU, Banks and if there are donors. The accumulated amount will then be accounted for and given to an accredited trustee bank that will manage the fund. To further clarify, the fund will serve as collateral or some kind of guarantee. In other words, a participating co-op that intends to borrow, will not borrow from the fund itself. Instead, it will borrow from a participating bank. Normally, the participating banks are the government banks particularly, DBP and LBP.
To make it enticing, the CSF is willing to dangle a sizable amount. Although co-ops have the obligation to contribute, co-ops can borrow up to 10 times the amount of their contribution in the fund. However, that amount will not be automatically be granted. The actual amount of loan to be released will depend on the evaluation of the application for loan. As to why the maximum loanable amount is up to 10x the contribution is because most co-ops cannot provide such amount to their members. That is according to BSP.
Not all co-ops can participate though. In order to participate in the CSF program, the co-op must be well capitalized and well managed, must apply for membership and contribute at least 100 thousand pesos in the fund. What is well capitalized and well managed is clarified in the CSF Cooperative Law or Republic Act 10744 and its IRR. This law was enacted purposely to formalize and sustain the existence of this CSF program.
With the passage of the CSF Co-operative Law, the CDA is tasked to register CSF Co-ops and supervise them at the same time. As a result, a new department was created in the CDA for which inquiries from interested co-ops can be coursed through. Should you wish to clarify some more or if you have some concerns, just visit the nearest CDA Regional Office in your area for further information. At present, the only existing CSF in the region are located in Baguio City and in Benguet Province.
