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DBP RESPONSE – MSME Recovery (Wholesale Lending)

The DBP RESPONSE to accelerate MSME Recovery (DBP RESPONSE-MSME RECOVERY) is a sub-program of DBP RESPONSE created in compliance to the Republic Act No. 11494 or known as the Bayanihan to Recover as One Act directing the Development Bank of the Philippines (DBP) to introduce low interest and/or flexible term loan program for operating expenses available to businesses affected by the COVID-19 pandemic, particularly that priority shall be given to those engaged in agri-fishery and non-essential businesses1 , including but not limited to, start-ups and cooperatives.

Eligible Borrowers

Wholesale

The following Lending Institutions which provide credit to start-up or MSMEs in agri-fishery and non-essential services:

    1. Rural banks;
    2. Thrift banks;
    3. Microfinance-oriented banks;
    4. Non – Bank Financial Institutions [i.e. Cooperatives, Microfinance Institutions, etc.)

Eligible Sub-borrowers:

Any duly registered micro, small and medium enterprises that are engaged in agri-fishery and non-essential services with preference for micro and small enterprises, including start-ups and cooperatives.

Eligible Loan Purpose

    • Relending to agri-fishery and micro, small and medium enterprises.
    • Sub-borrowers loan purpose must be for working capital/financing of operational expense requirements only.

Existing borrowers of the bank and those who have availed of the DBP RESPONSE may avail of additional loan under the DBP RESPONSE-RECOVERY.

Eligibility Criteria

Wholesale

Should comply with the Bank’s existing RAAC and acceptable financial ratios.

FIs that cannot comply with the RAAC or pre-qualifying criteria should be accredited by the Philippine Guarantee Corporation and all sub-loans should be guaranteed by the Philippine Guarantee Corporation. In no case shall an FI with negative capital position or with capital ratios below the BSP requirement (if applicable) be eligible under this program.

Credit Facility

Term Loan

Loanable Amount

Based on their computed borrowing capacity per the Bank’s guidelines set forth in CP 161-B dated January 27, 2016.  The maximum credit line (MCL) is the amount of aggregate credit facilities and shall be determined based on the needs of the FIs and lowest of the following determinants below:

    1. FI absorptive capacity x credit score/100
      (where absorptive capacity = capital or qualifying capital divided by minimum capital adequacy ratio less total risk assets);
    2. FI’s qualifying capital or capital x credit score/100; and
    3. DBP’s Single Borrower Limit (SBL).

Interest Rate

2.5% per annum fixed for three (3) years, provided that the lending rate to the sub-borrowers should be reduced by the equivalent of savings on cost of funds

Grace Period

Maximum of twelve (12) months grace period on principal only

Loan Tenor

Maximum of three (3) years including grace period

Loan Security/Conditions

    1. FIs that cannot comply with the RAAC or pre-qualifying criteria should be accredited by the Philippine Guarantee Corporation and all sub-loans should be guaranteed by the Philippine Guarantee Corporation. Proceeds shall be endorsed in favor of DBP.
    2. Assignment of sub-PNs at 100% of principal amount. Custody of sub-PNs shall remain with the borrower. Substitution of fully paid sub-PN or those that are past-due is required.

Mode of Release

Lump sum / Staggered

Standard Fees

Service fees – waived
GRT – for the account of the borrower
DST – for the account of the borrower

Minimum Documentary Requirements

    1. Board Resolution duly signed by the Board of Directors or Board of Trustees (whichever is applicable) or duly notarized Secretary’s Certificate
      • Authorizing the FI to borrow funds, negotiate and enter into agreement with the Bank, and designating at least two (2) officers of the FI (with their respective specimen signatures);
      • Authorizing the designated signatories to sign, endorse loan documents, Deed of Assignments, notes and other documents pertaining to the loan obtained from DBP.
    1. List of Incumbent Members of the Board of Directors/ Trustees and principal officers indicating therein their respective educational attainment and work experience as of recent date;
    2. List of existing principal shareholders and their stockholdings (with 10%) or more of total shares;
    3. Audited Financial Statements (FS) (i.e Balance Sheets and Income Statements) for the past three (3) years and latest interim FS, which should not be more than six (6) months old;
    4. Brief Company Profile;
    5. Articles of Incorporation/ Corporation and By-laws including amendments thereto, if any;
    6. Certificate of Registration with Securities and Exchange Commission (SEC) and/or Certificate of Authority to Operate from the BSP (if applicable);
    7. Deed of Assignment
    8. Copy of year-end and latest quarterly Risk Based Capital Adequacy Ratio (RBCAR) Report as submitted to BSP; and

The borrower shall execute a Data Privacy Consent Form or Credit Information Authority.

Per Loan Availment:

    1. Promissory Note
    2. Disclosure Statement
    3. Notice of Availment
    4. Deed of Undertaking

During Liquidation:

    1. Utilization Report
    2. Supplement to Deed of Assignment

Additional documents may be requested by the Bank to facilitate proper evaluation of the borrower.

Specific Terms and Conditions

    1. The FI/ NBFI shall submit a utilization report under the DBP RESPONSE – MSME RECOVERY not later than sixty (60) calendar days after the loan has been released.
    2. The FI/NBFI shall return to DBP the undisbursed amounts including the interest incurred computed up to the date of return/payment not later than 5 working days from date of advice from the Lending Unit.
    3. No subsequent releases shall be made until the FI/NBFI has submitted the utilization report and has returned/paid to DBP the undisbursed amount including the interest incurred. Failure to liquidate and/or return undisbursed amount to DBP shall constitute an event of default.
    4. FIs should ensure that that sub-lending rate should be reduced by the equivalent of savings on cost of funds.
    5. The Lending Unit shall conduct a validation of at least 5 PNs of underlying sub-borrowers within 10 working days from submission of the utilization report.

      To facilitate validation:

          • The Account Officer will randomly select at least 5 sub-borrowers and advise the FI to send via email a scanned copy of the original signed PNs of selected sub-borrowers to the Account Officer.
          • The FI should also undertake to replace or pay-off any ineligible sub-loan within 5 working days from date of advice received from the Lending Unit. The determination of the eligibility can be based on either the utilization report or the validation of the PNs.
    6. For new FI borrowers, CI may be deferred subject to the conduct of direct checking with credit banks. Loan release may only be made upon receipt of results of checkings made through the Loan Information System and NFIS.
    7. For existing clients, full CI is not required. However, updated bank checkings is required prior to loan release.

For existing wholesale borrowers, the existing BRR shall be used. For new clients, the BRR agreed upon with CRMD will be applicable. BRR of wholesale accounts availing of this program should not be automatically downgraded.

Download Brochure

For inquiries, feel free to contact:

Gracely Lux G. Itum
Program Officer
Program Development and Management II Department
(02) 818-9511 local 2330
glgitum@dbp.ph; pdm2-lpdu@dbp.ph

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