LANDBANK-DA/ACPC Innovative Financing Scheme

OBJECTIVE

To improve credit access of collateral-short farmers/fisherfolk by encouraging rural lending agents to lend to them.

MAIN STRATEGY

Landbank will provide liquidity assistance to rural lenders in two (2) modes:

  • Rediscounting of eligible loans of rural lenders at 100%
  • Credit line to non-bank lending agents

Quedancor will provide credit guarantee cover of up to 85% of non-collaterized farmer/fisherfolk loan portfolio of banks/lending agents against all risks (except willful default).

LENDING AGENTS

  1. Universal banks, commercial banks, rural banks, cooperative banks, thrift banks (to include savings and loan associations) and private development banks;
  2. Cooperatives duly registered with the Cooperative Development Authority (CDA)
  3. Agriculture-based enterprises (ABEs) with asset size above P1.5 M;
  4. Non-government organizations (NGOs), people’s organizations (POs)

FINANCING FACILITIES

Rediscounting line for banks:

Promissory notes issued by qualified sub-borrowers of banks can be rediscounted up to 100% of the face value.

Credit line or rediscounting for all other types of lending agents:

For the rediscounting facility, the promissory notes of sub-borrowers can be rediscounted up to 100% of the face value. The credit line facility shall be used for relending to sub-borrowers.

CREDIT LOAN/LINE AMOUNT

For Cooperatives – The rediscounted promissory notes and/or credit line inclusive of their existing obligations shall not exceed six (6) times to cooperative’s networth.

For Banks – The rediscounted promissory notes shall not exceed the bank’s Allowable Expansion of Risk Assets (AERA).

For NGOs, POs and other Institutions – The total amount of the credit line shall be the credit requirement of its borrowers but not to exceed twice its existing loanable funds (excluding borrowed funds).

For ABEs – The amount of loan to be extended shall not exceed 75% of the appraised value of its collateral or six times its networth, whichever is lower.

ELIGIBLE SUB-BORROWERS

Small farmers and small fisherfolk who are not existing borrowers of any of the lending agents.

ELIGIBLE PROJECTS OF SUB-BORROWERS

Crop production, livestock, poultry, fishery projects, procurement of production inputs (seeds, planting, stocking and rearing materials, fertilizers, etc.), and payment for farm services (labor, animal and machines).

LOANABLE AMOUNT TO SUB-BORROWERS

The loan amount shall depend on the type of project but not to exceed P150,000.00 per sub-borrower.

INTEREST RATE

LBP to lending agents:

For banks, other than commercial and universal banks
91-day Treasury Bills rate at the time of availment plus 1%

For all other lending agents
12% plus 2% service fee

Lending agents to sub-borrowers:
The pass on rate shall include a reasonable spread for the lending agent

ELIGIBILITY CRITERIA

For Cooperatives

  • Registered with the CDA
  • At least 3 years lending experience
  • Past due rate of not more than 25%
  • With written policies, systems and procedures on lending, accounting and bookkeeping and with installed books of accounts
  • With a Core Management Team composed of at least a full-time president/manager, duly bonded treasurer and bookkeeper
  • With installed capital build-up (CBU) and savings mobilization program
  • No outstanding past due obligations with its creditors

For NGOs, other Pos and other Institutions

  • Registered with the Securities and Exchange Commission (SEC) or other registering entity
  • With lending experience equivalent to at least 3 years
  • Past due rate of not more than 25%
  • With written policies, systems and procedures on lending, accounting and bookkeeping and with installed books of accounts
  • With a Core Management Team composed of at least a full-time president/manager, duly bonded treasurer and bookkeeper
  • Authorized to borrow and lend under its Articles of Incorporation or Charter (in case of state colleges or universities)

For Banks

  • Risk asset ratio of not less than 12%
  • Past due rate of not more than 25%
  • Profitable operations for the last three (3) years
  • Not experiencing liquidity problems
  • No serious irregularities and exceptions found per latest BSP and LBP audit/examination
  • No outstanding past due obligations with its creditors

For Agricultural-based Enterprises (ABEs)

  • Profitable for the past three (3) years
  • No ownership dispute for three (3) years
  • No major labor dispute the past three (3) years
  • No adverse findings on the owners and management
  • Debt to equity ratio not to exceed 80:20
  • At least 60% Filipino owned (if corporation) and 100% Filipino owned (if single proprietorship)

For further information and/or assistance please contact:

IFS Secretariat
c/o Noel Clarence Ducusin and/or Flordeliza De Guzman
Tel. 02-634-3320/21 loc. 113
email: ncducusin@acpc.gov.ph
fdeguzman@acpc.gov.ph

Source: Agricultural Credit Policy Council

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