The central bank reminds micro, small and medium enterprises (MSMEs) that there is now a standard business loan application form (SBLAF) that banks are mandated to provide to make MSME access to credit easier.
The guidelines for the adoption of the SBLAF are provided in Bangko Sentral ng Pilipinas (BSP) Circular No. 1156, which was issued in September last year.
The SBLAF is designed to make the loan application process streamlined and borrower-friendly for its target users, which are the MSMEs, according to a BSP official in a presentation on July 18 at the National MSME Summit 2023 held in Manila.
The application form also supports MSMEs’ access to financial products and services by facilitating transparency, ease of understanding, and efficiency in loan applications and processing.
At the same time, the SBLAF is expected to enable banks and other financial institutions to improve their risk assessment, hasten turnaround time, and facilitate transition to digital loan application platforms.
Moreover, the use of SBLAF among banking entities will support data requirements for improved and consistent credit information services.
Circular 1156 is part of the BSP’s thrust to “promote broad and convenient access to high quality financial services.”
It mandates the adoption of the SBLAF templates by covered entities. These are the BSP-supervised financial institutions including banks and their subsidiary/affiliate financing and leasing companies; government non-bank financial institutions; and financing/leasing companies with quasi-banking license that are not subsidiaries of banks.
Under the circular, MSME applicants will use the prescribed SBLAF templates when they apply for a loan. The templates have two components: the borrower information sheet and the list of supporting documents.
The applicant-borrower must be a sole proprietorship, partnership, cooperative, or corporation, each classified as an MSME or startup and natural person proposing to do business.
The SBLAF covers loans for use in financing business operations and capital expenditures. Business loans covered encompass both secured and unsecured loans.
Borrowers will have to choose between two kinds of SBLAF depending on their type of application.
• Annex A-1 for individual and sole proprietorship
• Annex A-2 for cooperative, partnership, and corporation, including one-person corporation
BSP Circular 1156 states that SBLAF templates shall be the sole forms used for covered loan applications and may not be modified by the lending institutions.
The circular also provides that the SBLAF templates shall be used for new covered loan applications, additional loans, and renewal and restructuring of existing loans.
Banks are also mandated to ensure that the SBLAF templates are accessible in all channels, where the borrowers can submit a loan application.
The SBLAF templates can be made available in printed form and/or electronic form. Electronic signature shall be accepted to authenticate or provide consent in the electronic form.
Access to affordable financing remains a major stumbling block for MSME survival and growth.
Sergio Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc., has noted that despite comprising the overwhelming majority of businesses and accounting for the biggest share of total employment, “the Philippine MSME sector is the most ‘under-banked’ sector in the whole of Asia.”
This situation led to the closure of many MSMEs at the height of the pandemic and is behind the slow and precarious recovery of those that have survived the global health crisis.
MSMEs often struggle to gain access to formal credit due to their lack of traditional collateral and perception of being high-risk clients, prompting them to turn to usurers for capital.