Small and Medium Enterprises Credit (SMEC) Program


The Small and Medium Enterprise Credit (SMEC) Program delivers much-needed credit to small and medium scale enterprises in the countryside, with country-based financial institutions (such as rural banks and thrift banks) acting as conduits for funds.

The SMEC was launched in 1989 through a US$ 13 million financial grant from the United States Agency for International Development (USAID). At the end of the grant life in 1993, ownership of the Fund was transferred to the Department of Finance, as beneficiary of the funds held in trust by the Development Bank of the Philippines. The SMEC Program, meanwhile, was spun-off to become a self-sustaining unit within PBSP.

Impressed by the phenomenal success of the SMEC model, the program was replicated in 1995 by the Kreditanstalt fur Wiederaufbau (German Bank for Restructuring) for its own enterprise promotion program in the Philippines.


The combined USAID and KfW funds for the SMEC Program amount to US $21 million or roughly Php 600 million exclusively for re-lending to the target enterprise sector.

Since it started, the program has disbursed a total of Php 1.8 billion, assisting some 6,422 enterprises through 52 intermediary financial institutions (IFIs), helping to create nearly 47,520 full-time jobs in the countryside. (as of March 31, 2003)

Fund Administration

The Land Bank of the Philippines is the designated Trustee Bank for the KfW Funds.

Program Implementation Committee

A Project Implementation Committee (PIC) serves as the governing body for the SMEC/KfW program. The PIC approves the accreditation of IFIs upon the recommendation of a Project Management Team. Its members also provide policy guidance on business and finance.

The PIC is co-chaired by two members of the PBSP Board of Trustees. Members come from the thrift and rural bank foundations, and a mix of government representatives from the finance trade and industry departments, and two government financial institutions.

The PIC is composed of:

  1. Philippine Business for Social Progress
  2. Department of Finance
  3. Department of Trade and Industry
  4. Development Bankers Association of the Philippines
  5. Rural Bankers Association of the Philippines
  6. Land Bank of the Philippines
  7. Chamber of Thrift Banks

Program Mechanics

  1. The Program Implementation Committee (PIC) accredits rural and thrift banks to participate in SMEC and determine their credit limits.
  2. The SMEC credit funds are lent to accredited banks, which shall in turn relend the same funds to eligible SMEC sub-borrowers.
  3. Loan applicants can make inquiries and submit their applications to any SMEC-accredited bank in their locality or place of business.
  4. Accredited banks submit to PBSP the subloan schedules in support of drawdown against their credit lines.
  5. The bank releases the loan proceeds from DBP/LBP to the SMEC/KfW sub-borrowers.

SMEC Facilities

There are two windows through which SMEC credit can be availed: the Enterprise Support Program (SMEC I) and the promotion of Small Enterprise (PoSE) Program (SMEC-KfW).

Aside from credit, SMEC also supports Business Support Activities in the form of training and consulting to improve competitiveness of SMEs. Capability building assistance is likewise extended to RDAP and CTB to improve credit skills of personnel and risk management.

List of Accredited Companies (IFIs)

1. Anchor Savings Bank
2. Asiatrust Development Bank
3. Bangko Kabayan (Ibaan Rural Bank, Inc.)
4. Bank of Florida (a Rural Bank
5. Bataan Development Bank
6. BMS Rural Bank
7. Dumaguete City Development Bank
8. First Macro Bank (Rural Bank of Pateros)
9. First Provincial Development Bank
10. Gateway Rural Bank
11. Guagua Rural Bank 12. Hiyas Savings and Loan Bank
13. Ibalon Rural Bank
14. Lipa City Development Bank
15. Network Rural Bank of Southern Phils.
16. Philippine Rural Banking Corporation
17. Philippine Business Bank 18. Premiere Development Bank
19. Producers Rural Banking Corp.
20. Queen City Development Bank
21. Rural Bank of Paete, Inc.
22. Rural Bank of Panabo
23. Rural Green Bank of Caraga

Pre-Qualifying Criteria

Interested Rural Banks will have to meet certain pre-qualifying criteria prior to formal application for accreditation.

For Pre-Qualiication Assessment, please complete the details below. This information will be used to decide whether to request you to submit a set of requirements to apply for accreditation.

Name of Institution: ____________________
Contact Person: ______________________
Address: ____________________________
Telephone No.: _______________________

Net Income for the last 3 years:
Php ______ (2000) Php_______ (2001) Php _________(2002)

Risk Asset Ratio:
Php ______ (2000) Php_______ (2001) Php _________(2002)

Minimum Capitalization:
Php ______________________

Past Due Ratio (3-year average) _______ %

Debt to Equity Ratio _______ %

Government Equity Php __________

Outstanding Capital Stock Php __________

Accreditation Criteria

Rural Banks who wish to be accredited with SMEC are required to submit the following documents:

  1. Articles of Incorporation and By-Laws
  2. List of Members of the Board of Directors and Officers
  3. List of Stockholders and their stockholdings as of the last report submitted to BSP
  4. Bio-Data of Directors/Officers submitted to BSP (RB/COB Form 15)
  5. Audited Financial Statements for the last four (4) years
  6. Consolidated Statement of Earnings and Expenses as of December 31 of the latest reporting year and latest quarterly report submitted to BSP(RB/COB Form 4)
  7. Consolidated Statement of Condition as of December 31 of the latest reporting year and latest quarterly report year submitted to BSP (RB/|COB Form 2-Schedule 2A-2G)
  8. Summary of Loans Granted (RB/COB Form 3)
  9. Status Report on Past due accounts and Valuation reserves (RB/COB Form 10)
  10. Schedule of Past due/non-performing loans based on the latest financial statements for the last 4 years (RB/COB Form 10)
  11. Aging of past due loans by sector based on the latest reporting year submitted to BSP
  12. Schedule of Bills Payable by Creditor based on the latest audited financial statements and latest quarterly report submitted to BSP (RB/COB Form 2G)
  13. Copy of latest BSP-SES Report of Examination
  14. Detailed History of the Bank
  15. Policy Statement of the Bank on Samll and Medium Enterprise
  16. Location of Branches, if any
  17. Additional branch location with BSP approval
  18. Statement of Conditions by banking unit as of December 31 of the latest reporting year (RB/COB Form 3)
  19. Plantilla Organization (RB/COB Form 14)

Eligibility Criteria

SMEC sub-borrowers can avail of loans if they meet the following qualifications:

  • A citizen or permanent legal resident of the Philippines
  • A corporation, partnership or business organization which is more than 50% owned by Philippine nationals
  • Have their principal place of business in the Philippines, outside the National Capital Region
  • Have a 100% privately owned business with total assets of not more than Php 100 million at the time the loan is granted

To be eligible for loans, investments must be either for:

  • Starting a new business
  • Expanding an existing business

Loan funds may be used:

  • To acquire fixed assets, such as land, buildings, machinery
  • For related services, such as equipment installation
  • As working capital

Eligible business activities include:

  • Any legal private, productive or commercial activity conducted in the Philippines, outside the national Capital Region
  • Off-farm private enterprises which are engaged in manufacturing or agri-business, such as:
  • – light industrial manufacturing
  • – light handicraft
  • – woodworking
  • – metal working
  • – agri-processing or manufacturing
  • – agri-trading
  • – non-traditional agriculture production,
  • pioneering in nature
  • – services (with social impact)

Non-eligible business activities are those that:

  • are adverse to the interest of women
  • entail pollution
  • contribute to the depletion of tropical forests
  • ignore the protection of working children

For more information and/or assistance please contact:
Ms. Patricia C. Calilong
Associate Director
Philippine Business for Social Progress
Telefax: (02)527-3751
email :