The Philippine Exporters Confederation (Philexport) has launched a new lending facility that will allow small- and medium-sized enterprises (SMEs) to obtain finance on the strength of export letters of credit (L/Cs) received.

The Export Transactional Direct Financing Facility (ETDFF) is aimed at helping exporters cope with the prevailing difficult trading environment and is now available in Cebu City. SMEs will be able to use the facility to raise finance without being required to putting up collateral.

Manila model

Philexport-Cebu President Apolinar Suarez, Jr. says the lending facility is a joint undertaking of the Small Business Guarantee Finance Corporation (SBGFC) and Philexport-Cebu. It is apparently modelled on a pilot programme initiated by Philexport-Manila at the height of the financial crisis in 1997 to reopen credit access for small exporters in Metro Manila when most private banks clamped down on new loans.

Philexport then teamed up with the Foreign Buyers Association of the Philippines (FOBAP), the SBGFC and the Land Bank of the Philippines to create a lending programme especially tailored to meet the working capital needs of small exporters.

Procedure

Under the programme, exporters are required only to post L/Cs or purchase orders as collateral, although they must also submit standard financial statements required by the bank.

Philexport endorses borrowers from among its members while FOBAP verifies the authenticity of L/Cs and monitors the use of the borrowed money and its repayment.