The People’s Credit and Finance Corporation (PCFC) was established by virtue of Memorandum Order 261 & Administrative Order No. 148. Republic Act 8425 of 1998 or the Social Reform and Poverty Alleviation Act further strengthened the role of PCFC as the lead government entity specifically tasked to mobilize resources for microfinance services for the exclusive use of the poor.

Following its mandate to provide the poor access to credit and other microfinance services to uplift their economic status, PCFC wholesales short, medium & long term investment loans to accredited Microfinance Institutions (MFIs). These are Rural or Cooperative Banks, Thrift Banks, Non- Government Organizations (NGOs) and Cooperatives that implement credit assistance programs using any proven microfinance lending methodology to finance livelihood projects that can augment the income of targeted poor clients.

PCFC also provides institutional credit to program partners for capability building activities as well as for expenditures or asset acquisitions related to the lending program.

	Investment Credit	Institutional Credit
Tenor	One Year Revolving Credit Lines via drawdowns Maximum of 5 years	2-4 years depending on item to be financed
Interest Rate	10%-12% based on interest guidelines	3 % p.a. 1% service charge
Credit Line AMT to MFIs	Based on Evaluation / Credit Needs	Based on evaluation/credit needs
Sub Loans to End Borrowers	Up to P150,000	Not Applicable; Loan is directly to MFI
Collateral	Mainly PNs of sub borrower-clients & underlying collaterals and /or others as may be required	Assets to be acquired from loan proceeds, if any

TARGET END-CLIENTS

PCFC’s credit facilities coursed through MFIs are meant to augment the income of poor households as defined by the National Economic Development Authority (NEDA) & as identified by the government’s Social Reform Agenda through the National Anti- Poverty Commission (NAPC).

Loan sizes for sub borrowers organized in groups or centers start from Php 3,000 gradually increasing per loan cycle to Php 150,000. For individual borrowers, loan size may range from Php10,000 to P 150,000 depending on project requirements.
 

ACCREDITATION CRITERIA

INSTITUTIONAL

	New Line	Renewal
Legal Personality	Duly Registered	Duly Registered
Track Record	At least 3 years lending experience	At least 3 years lending experience and at least 1 year in microfinance
Board of Directors	Competent and qualified as Director under the law and pertinent regulations	Competent and qualified as Director under the law and pertinent regulations
Core Management Team	Presence of full time Manager, Auditor, Cashier & Bookkeeper	Presence of full time Manager, Auditor, Cashier & Bookkeeper
Microfinance Lending Group	Willing to put up a separate unit for the program with full-time staff	Has a separate unit for the program with full-time staff
Staff Development	Presence of staff development program including microfinance and credit and financial management	Continuing staff development program including microfinance and credit and financial management
Operating Systems	Presence of MIS, Accounting, Internal Control Systems	Presence of MIS, Accounting, Internal Control Systems
Results of Credit and Background Investigation	No adverse findings on the MFI; no past due loans and derogatory records on key officers	No adverse findings on the MFI; no past due loans and derogatory records on key officers
a. Total Resources	At least P5.0 Mn	At least P5 Mn resources with no deterioration
b. Net Worth or Fund Balance	At least P2.0 Mn	At least P2.0 Mn
c. Liquidity           1. Current Ratio (NGOs/Coop)	2:1 current ratio	2:1 current ratio
2. Liquid Ratio (Banks)	25%	25%
d. Leverage           1. Capital / Fund               Balance to Risk Asset Ratio (CRAR)	At least 10% after PCFC & other creditors	At least 10% after PCFC & other creditors
e. Portfolio Quality           1. Past Due Rate (PDR)	Not more than 15% net of valuation reserves for over all operations	Not more than 15% net of valuation reserves for over all operations
2. Loan Valuation Reserves Rate	Based on BSP Requirement	Based on BSP Requirement
f. Profitability           1. Net Income	Profitable for the last 3 years	Profitable for the last 3 years for over-all operations

MICROFINANCE OPERATIONS

	New Line	Renewal
Outreach	At least 500 existing borrowers	Attainment of targeted outreach in the last CFP approval
Savings Mobilization	Presence of savings mobilization program	Continuing growth in savings accounts from microfinance clientele
Capability Building Intervention	None	With existing capability building program for clients
Portfolio Quality      1. Portfolio at Risk Ratio  (PAR 1)	Not more than 5%	* Not more than 5% * Existing MFIs with PAR over 5% as of approved date shall be given 2 years to improve to desired rate.
2. Loan Valuation Reserves Rate	100% compliance of the required reserves	100% compliance of the required reserves
3. Collection Rate	Annual collection rate of at least 95%	Annual collection rate of at least 95%
Profitability      1. Net Income (before & after grant)	Profitable micro-finance operations before & after grants	Profitable micro-finance operations before & after grants

PERFORMANCE RATINGS

	New Line	Renewal
NCC PESO Rating	None	At least 70%
CAMELS Rating	CAMELS Rating of at least 3	Same
SCALE Rating	At least 70%	Same

PROJECTS

Types of projects to be funded by the MFIs depend upon the needs and capabilities of the sub borrowers or clients. The client shall decide on the type of project to be undertaken with the program partner advising him in determining the viability of the project. However, the following guidelines must be followed in determining the type of project of the clients:

• Viable & has a ready market for the product or service
• Able to generate income for the clients within a short period of time, i.e. daily, weekly, monthly cash flows
• Within the capability of the clients to manage
• Able to generate savings for the clients.
• Complies with all government rules and regulations.

APPLICATION PROCEDURE

Potential program partners should provide the following:

• Information on the organization including plans and programs.
• Certificate of Registration, Articles of Incorporation and By - Laws.
• Information Sheet on the members of the Board of Directors and Principal Officers.
• Audited Financial Statements for the last three (3) years.
• Credit Application Form
• Board Resolution authorizing the Borrowing and the officers) to sign loan applications and other loan documents