The document discusses the Philippine Business for Social Progress (PBSP) and its Enterprise Development Program. PBSP is a non-profit foundation established by Philippine businesses to fight poverty through corporate social responsibility programs. Its Enterprise Development Program aims to reduce poverty by increasing access to financing and business development services for micro, small, and medium enterprises. It provides wholesale lending and technical assistance to partner financial institutions and microfinance organizations to enhance their lending capabilities.

1. ENHANCING
CAPACITIES
OF MSMEs
Philippine Business for Social Progress
ENTERPRISE DEVELOPMENT GROUP

2. • The largest corporate-led, non-profit, social development
foundation in the Philippines.
• Founded in the 1970s by 50 business leaders; now has 255
corporate members.
• PBSP is at the forefront in the fight against poverty
through trailblazing corporate social responsibility (CSR)
or corporate citizenship programs.

3. OUR VISION
To lead the business
sector’s effort to reduce
poverty in the Philippines.
OUR MISSION
PBSP is committed to
poverty reduction by
promoting business sector
leadership in, and
commitment to programs
that lead to self-reliance.
PBSP Board of Trustees

4. PBSP’s Major Programs
Sustainable Livelihood &
Enterprise Development
Education Environment
Health

5. THE WAY TO GO
PBSP’s Enterprise Development Program
CREDIT BDS
Market-based approaches to poverty reduction

6. PBSP’s Enterprise Development Program:
Goals & Objectives
To contribute to reducing poverty in the Philippines
To create and grow enterprises, generating jobs and
income opportunities for men and women
Enhanced institutional capacity
of accredited intermediary
Increased MSMEs’ access to
financial and microfinance
financial and business
institutions through wholesale
development services
credit and business support
services

7. Small and Medium Enterprise Credit (SMEC) Program
SMEC is a wholesale lending
program that aims to increase
credit access of accredited rural
and thrift banks and
microfinance institutions for
lending to micro, small and
medium enterprises (MSMEs).
Alongside Credit, SMEC
provides business support to
accredited financial
intermediaries to enhance their
lending capabilities to MSMEs.

8. SMEC Background
• 1989 – established SMEC thru a US$13M grant from USAID
• 1995 – ownership of the fund was transferred to DoF, held in
trust by DBP
• 1995 & 1998 – KfW (German Dev’t. Bank) augmented
funding by PhP389.7M under a bilateral loan agreement
among KfW, Landbank, as the borrower, and PBSP as the
Project Executing Agency
• 2008 – DoF approved the extension of SMEC until 201x

9. Fund administration
SMEC derives policy guidance from the Project Implementation
Committee (PIC) composed of representatives from:
• Philippine Business for Social Progress
• Department of Finance
• Land Bank of the Philippines
• Development Bank of the Philippines
• Chamber of Thrift Banks
• Rural Bankers Association of the Philippines

10. SMEC Cumulative Accomplishment
PhP 4.3 billion
MSME loans disbursed
12,737
MSMEs benefited
83,823
jobs generated
21
active partner IFIs/MFIs

11. Institutional Development Support to RBAP
Various trainings 847,450
Research & Policy Analysis 361,350
Computerization & Database Project (1994) 2.8 million
Hiring & training of additional micro banker 140,853
programmers (1997)
MABS replication project (2001) 2.2 million
Total Grants 6.35 million

12. Qualifications of IFIs/MFIs
• Rural Bank, Thrift Bank, or Microfinance
Institution
• Operating for at least three years
• Asset Size: TB=P100M up; RB=P50M up;
MFI=P300M up
• Committed to MSME development
• Financially stable
• Governed by sound credit policies
• Demonstrated management capability and
performance

13. Financial Products
MSME LOAN
Short-Term Facility Medium-Term Facility
• 6-11 months • 1-5 years
• • Portfolio Financing (Php 1 M min. loan
Sub-loan amounts – Php50k to Php1.0 M drawdown)
• Portfolio Financing (Php0.5M min. loan • Micro, Small and Medium Enterprises
drawdown) (MSMEs)
• Micro Enterprises (Asset size – Php150k to • Max. subloan amount - Php10M
Php3.0 M) • Funding share (SMEC 80% : IFI 20%)
• Funding share (SMEC 80% : IFI 20%) • Cash Advance (90 days liquidation)
• Rediscounting (within 30 days) • Term – weighted average life of the
• Principal Repayment (balloon at nearest portfolio
maturity date) • Quarterly repayment term (Principal +
Interest)
• Interest Repayment (monthly or quarterly)
• Interest Rate: Variable (adjusted quarterly)
• Interest Rate: 0.5% lower than variable rate or Fixed
• Securities: Assignment of sub-borrowers • Securities: Assignment of sub-borrowers’
PNs, REMs and other underlying securities PNs, REM and other underlying securities

14. Financial Products
MICROFINANCE LOAN
• 6-11 months
• Sub-loan amounts – Php150k &
below
• Minimum loan drawdown of
Php0.5M
• Funding share (SMEC 80% : IFI
20%)
• Rediscounting (within 30 days)
• Repayment (monthly / quarterly)
• Interest Rate: 8.5%-9.0% p.a.
variable rate + 2% for fixed rate
• Securities: PDC

15. Eligible MSME sub-borrowers
• The principal business owner is a citizen or
permanent legal resident of the Philippines
• Duly registered business organization, at least 60%
owned by Philippine nationals
• Have their principal place of business in the
Philippines
• Must be 100% privately-owned with total assets of
not more than P15 million at the time the loan is
granted

16. Qualified business
Purpose of Loan
activities
• Trading • Fixed asset acquisition
• Light Industrial
Manufacturing • For services related to asset
• Handicraft acquisition (e.g. equipment
• Woodworking installation and
commissioning)
• Metalworking
• Food Processing
• Working capital (e.g. raw
• Services
materials, finished goods,
• Agri-processing operating expenses)
• Non-traditional agri
products

17. What is BDS?
• Business Development Services (BDS)
refers to the wide range of services used by
entrepreneurs to help them operate efficiently and
grow their business with the broader purpose of
contributing to economic growth, employment
generation, and poverty alleviation.
• Studies have shown that BDS increases the
survival of small-scale enterprises, and
contribute to their growth
Donor Committee for Enterprise Development, Guiding Principles, 2001

18. Types of BDS
• Market Access
• Infrastructure
• Policy/Advocacy
• Input Supply
• Training & Technical Assistance
(including Business Advising)
• Technology and Product Development
• Alternative Financing Mechanisms

19. PBSP-Business Advisory Program
• PBSP-BAP delivers business advice
and technical assistance to MSMEs
by engaging Filipino professional
experts as Volunteer Advisers
• It covers almost all dimensions of
business such as Accounting and
Finance, Marketing, Production,
and Organizational Management

20. PBSP-BAP Accomplishments
• 171 assignments Client Distribution by Asset Size
involving 507
MSMEs
Medium
• 82 assignments Small
completed Micro
benefiting 112 0% 10% 20% 30% 40% 50% 60%
MSMEs
Micro 65%
• 500 VAs Small 35%
nationwide Medium 5%

21. Profile of Clients Served by PBSP-BAP
Client Distribution by Sector Type of Assistance Rendered
Services Organization
Manufacturing
Production
Food processing
Accounting
Agribusiness
Tourism Marketing
0% 10% 20% 30% 40% 0% 10% 20% 30% 40%
n=299
Tourism 5% Marketing 31%
Agribusiness 12% Accounting 25%
Food processing 19% Production 24%
Small manufacturing 30% Organization 20%
Services 34%

22. Results of BAP’s Assistance
• 73% reported higher income and
sales
• 95% improved access to market
• 58% hired more workers to cope
with increased demand
• 27% maintained employment level
• 9% were able to avail of financing
from various sources
CESO-BAPII End-of-Project Evaluation Report (2008)

23. Integrating Business Advising
with Financing
• Improve loan repayment; loan quality
• Enhance the financial performance and credit-
worthiness of MSME-clients
• Improve business of MSME-clients, thus
expanding demand for financing
• Strengthen MSME-client relations
• Improve the bank/MFI’s social performance

24. Financing, coupled with BDS, can be a unique
expression of Corporate Social Responsibility of
Financial Institutions—a business solution to
addressing poverty.
“If we can spend the early decades of the 21st century finding
approaches that meet the needs of the poor in ways that
generate profits and recognition for business, we will have found
a sustainable way to reduce poverty in the world.”
Bill Gates (2008), Davos.

25. “PBSP aims to combat poverty through enterprise development via job
generating programs, and by creating and assisting micro, small and
medium enterprises through credit and non-credit programs. This
recognizes the role which enterprise plays in development, democracy
and in the protection of human rights.”
Manuel V. Pangilinan
Chairman, PBSP & PLDT

26. Contact us:
The Group Director
Enterprise Development Group
PHILIPPINE BUSINESS FOR SOCIAL PROGRESS
PSDC Building, Magallanes cor. Real Sts.,
1002 Intramuros, Manila, Philippines
Telephones: (+63-2) 527-7741 to 48 | Fax (+63-2) 527-3751
Email: pbsp@pbsp.org.ph
www.pbsp.org.ph