The business community is putting up P500 million guarantee fund to provide access to capital for micro and small enterprises which it hopes would also be matched by the commercial banks and the government’s financial institutions.

Ambassador Francis Chua, president of the Philippine Chamber of Commerce and Industry, announced this PCCI initiative at the 18th Metro Manila Business Conference held at the Manila Hotel last Friday.

The creation of the guarantee fund is part of the PCCI’s 100-Day agenda it presented to President Aquino before his first state of the nation address.

PCCI has been pushing for the improvement of MSME access to financing through full and effective implementation of the Magna Carta for MSMEs.

PCCI chairman Sergio Ortiz-Luis Jr. explained to reporters at the sidelines of the conference that PCCI is looking at P500 million guarantee fund from the private sector, which it hopes the country’s biggest commercial banks are going to matched.

In coming up with a guarantee fund, Ortiz-Luis said that the number one weakness of MSME is the lack of guarantee for them to access loans from the banks.

He said the guarantee being provided by the state-owned Trade and Investment Development Corporation of the Philippines (TIDCORP) is very small to accommodate the MSMEs. Already, Ortiz-Luis said the PCCI has generated P100 million initial commitment from some individuals. He expects PCCI to make the guarantee fund in operation before end of this year.

“The P500 million is easy because this is not drawn immediately,” he said.

They may also tap the GFIs to match the fund, but PCCI is waiting for the signal if the government would favorably look at such guarantee scheme, which is normally seen as risky.

“We are doing this as part of our corporate social responsibility,” he said.

The PCCI, however, is still drawing up the fine prints including the minimum amount of loan that could be guaranteed under the fund. The Thai government provides loan guarantee of up to 30  percent for an MSME, Ortiz-Luis said.

Banks normally require guarantees and collaterals for “clean loans,” but which MSMEs can hardly put up.