Davao chamber eyes unit to extend microfinance loans

Sofronio Jucutan, former DCCCII president who is heading the executive committee of the Small and Medium Enterprises Week 2007, told reporters a study was completed in 2004 and was approved by the chamber's then board of trustees on the creation of a corporation from the chamber to handle the proposed microfinance unit for SMEs.

The Small and Medium Enterprise Development Council, where DCCCII is a part of, is holding the 2007 SME week from July 16 to 21 here.

Jucutan told reporters at the Club 888 press conference Wednesday one of the factors hampering growth of the SMEs is their poor access to microfinance to usher in business.

The unit will be tasked to extend small loans to SMEs, especially those whose needs are too big for existing microfinance players and too small for banks to pay attention, he said.

Jucutan said the government, through the Department of Trade and Industry, pledged to extend "limitless" microfinance fund to the chamber since 2003.

But he said the plans have not yet materialized, lamenting that the government's plan to support livelihood, especially via SMEs, has become "lip service."

He specified small scale lenders such as Indian nationals and other "five-six" operators who cater to those intending to borrow less than P50,000. Jucutan said most of the banks and other established microfinance institutions (MFIs) offer loans of at least P500,000 loans, with voluminous documentation and collateral.

He said the chamber had eyed the middle players, those who intend to borrow higher than P50,000 but not more than P500,000 as there is a dearth of MFIs serving them.

Jucutan estimated around 18,000 registered SMEs in Davao City but could not give any estimate on how many of them would avail the middle range loans they intended to offer.

Jucutan said the plan to offer microfinance loans was at first opposed by some members of the chamber over the issue of competition with banks affiliated with DCCCII. But he said the plan was eventually favored over the discovery that there are no providers for the middle range small loans.

The chamber had proposed to form the unit as a separate entity because it is a foundation that is not allowed to go into business.

He said they intend to extend loans with minimum documentation required and, if possible, without collateral.