Who is the average SME Borrower of SBGFC?

He is above 50 years of age, and has some health concerns. He has a low financial capacity, meaning his personal wealth is not enough to cover his loan obligation.

While he has a wealth of experience in running the business, having a professional track record of managing the enterprise and the enterprise being in existence for more than five years, he has less than three years credit track record and in fact has limited access to funding from formal lending institutions.

This profile of the average SME borrower emerged from among other findings in the recently completed first year review of the implementation of the Borrower Risk Rating (BRR) System conducted by the Risk Management Unit (RMU) of the corporation.

The BRR System is part of the risk-based lending strategy and advocacy of the corporation to improve portfolio quality and manage its credit risks.

Benel P. Lagua, President and COO and Chief Risk Officer said that the while the SBGFC borrower is not your ideal borrower, the risk rating score of its average borrower is 69, which is BRR 4. The rating is considered Fair or of relatively good risk quality borrower.

Lagua describes the BRR 4 enterprise as having been profitable for the last three years. The cash it generated is adequate to ensure debt repayment capacity, but it could suffer from an economic downturn. It respects its obligations and has for the past three years been up to date in loan repayments with the bank. It is considered of moderate risk quality.

“Specifically, in terms of financial condition, the average SBGFC borrower has an enterprise that is very liquid, with a current ratio of 7.85 times or better. It has little current liabilities; in fact it has very small liabilities,” Lagua explained.

“The average SBGFC-funded business has a debt to equity ratio of 1.0 or less. Because of its low leverage position, the enterprise has elbow room to fund expansions through additional borrowings.

“The average borrower has very limited credit track record with formal lending entities such as banks and government financial institutions,” he added.

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