Small and Medium Enterprise Development (SMED) Council Resolution Nos. 9, 10 and 11

CIRCULAR LETTER Series of 1995

Attached for your information and guidance, are copies of Resolution Nos. 9, 10 and 11, all dated November 10, 1995, of the Small and Medium Enterprise Development (SMED) Council, relative to matters which are considered compliance with the mandatory allocation provision of R.A. No. 6977, otherwise known as the Magna Carta for Small and Medium Enterprises.

EDGARDO P. ZIALCITA Deputy Governor

Small and Medium Enterprise Development Council SMED Council Resolution No. 9 Series of 1995

GUARANTEE COVER FOR DOMESTIC TRADERS

WHEREAS, Republic Act 6977, otherwise known as the "Magna for Small and Medium Enterprises", mandates the Small and Medium Enterprise Development (SMED) Council to promulgate implementing guidelines, programs, and operating principles as may be deemed proper and necessary;

WHEREAS, one of the recommendations on the 17 April 1995 SMED Council meeting was for the Small Business Guarantee and Finance Corporation (SBGFC) to clarify the definition of "traders" to determine whether domestic traders would qualify under its guarantee program and be eligible for assistance under the Magna Carta for Small Enterprises;

WHEREAS, based on the findings of the study conducted by the SBGFC, R.A. 6977 does not prohibit the extension of assistance to domestic traders. The role of domestic trading in the movement of goods from the producer to the consumer is a valuable input to the overall development of the industry sector and it contributes substantially to the economy in terms of employment, income generation, revenues and value added.

NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved to include domestic trading as a business activity eligible for government assistance under Section 4 of this Act and in the SBGFC's guarantee programs, adopting the Guarantee Cover for Domestic Traders proposed by the SBGFC.

AND, BE IT RESOLVED FURTHER, that all loans granted by lending institutions to domestic traders shall be deemed compliance to the mandatory allocation provision of R.A. 6977, provided that the domestic traders meet the total asset value requirement.

Approved, 10 November 1995.

For the SMED Council:

MA. FINA C. YONZON Head, SMED Council Secretariat

SMED Council Resolution No. 10 Series of 1995

LOANS TO EXPORT TRADERS AS COMPLIANCE TO THE MANDATORY ALLOCATION PROVISION OF R.A. 6977

WHEREAS, Republic Act 6977, otherwise known as the "Magna Carta for Small and Medium Enterprises", mandates the Small and Medium Enterprise Development (SMED) Council to promulgate implementing guidelines, programs, and operating principles as may be deemed proper and necessary;

WHEREAS, under Section 13 of the Magna Carta for Small Enterprises, all lending institutions are mandated to set aside a portion of their total loan portfolio and make it available for small enterprise credit;

WHEREAS, SMED Council Resolution No. 6 dated 04 November 1994 allows loans granted by lending institutions to export traders covered by the guarantee of the Small Business Guarantee and Finance Corporation (SBGFC) to be considered as compliance to the mandatory allocation provision of this Act;

WHEREAS, all the qualified export traders should benefit from the provisions of this Act.

NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved that all loans granted by lending institutions to export traders, including those not guaranteed by the SBGFC, shall be deemed compliance to the mandatory allocation provision of R.A. 6977, provided that the export traders meet the total asset size requirement.

Approved, 10 November 1995.

For the SMED Council:

MA. FINA C. YONZON Head, SMED Council Secretariat

SMED Council Resolution No. 11 Series of 1995

COMMITTED CREDIT LINES AS COMPLIANCE TO THE MANDATORY ALLOCATION PROVISION OF R.A. 6977

WHEREAS, Republic Act 6977, otherwise known as the "Magna Carta for Small and Medium Enterprises", mandates the Small and Medium Enterprise Development (SMED) Council to promulgate implementing guidelines, programs, and operating principles as may be deemed proper and necessary;

WHEREAS, under Section 13 of the Magna Carta for Small Enterprises, all lending institutions are mandated to set aside a portion of their total loan portfolio and make it available for small enterprise credit;

WHEREAS, the Philippine Commercial and International Bank has requested a clarification of the issue on whether committed credits — i.e., credits awaiting availments by borrowers — form compliance to the mandatory allocation provision of the Magna Carta for Small Enterprises;

WHEREAS, the law requires lending institutions to allocate a portion of their total loan portfolio and make the same available for small enterprise credit but does not prescribe to grant actual loans to small enterprises.

NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved that unavailed but committed credit lines shall be deemed compliance to the mandatory allocation provision of R.A. 6977.

Approved, 10 November 1995.

For the SMED Council:

MA. FINA C. YONZON Head, SMED Council Secretariat