The SME Unified Lending Opportunities for National Growth (SULONG) Program, with P100 million total fund allocation, is a lending program by government financial institutions (GFIs) designed to give small and medium enterprises (SMEs) greater access to short- and long-term funds by:
* simplifying and standardizing the lending procedures of GFIs
* shortening the list of documentary requirements to further facilitate the lending process
* creating a wider, borderless financing system
* and lowering the effective cost of borrowing by SMEs under more liberal requirements.
An SSS member-borrower may avail himself of the loan facility through SSS-accredited conduit banks which will on-lend the fund to eligible borrowers for financing, for whatever purposes my the loan used.
The program extends short-term and long-term loans. A short-term loan, that is, a loan payable in one year, may be used for the export packing credit or temporary working capital. While a long-term loan, a loan payable in a maximum of five years, may be used to purchase of equipment; building or warehouse construction; purchase of lot; and purchase of inventories or as permanent working capital.
Under the program, eligible borrowers shall be existing private enterprises with the following qualifications:
* enterprises in all industries except trading of imported goods, liquor, cigarettes, and extractive industries like mining or quarrying;
* are at least 60 per cent Filipino owned;
* enterprises with asset size of not more than P100 million, excluding land;
* have positive income for the previous year. If the previous year’s income is negative, the average income of the past 2 or 3 years should be positive;
* have debt-to-equity ratio of not more than 80:20 after financing, or 70:30 if borrower is a franchisee;
* are SSS member-employers of good standing.
For short-term loans, the program can fund up to 70 per cent of the value of the Letter of Credit or Purchase Order for export packing, or 70 per cent of the working capital requirement, up to a maximum of P5.0 million. While for long-term loans, the program can fund up to 80 per cent of the incremental cost, up to a maximum of P5.0 million.
For short-term loans, the maximum term shall be 1 year. While for long-term loans, the maximum term shall be 5 years, including a 1 year grace period on principal payment. Principal and interest shall be payable in equal monthly amortizations.
The interest rate is 9 per cent for short-term loans while for long-term loans, the interes is 11.25 per cent for loans with a term of up to 3 years and 12.75 per cent for loans with a term of over 3 years to 5 years.
The interest rates shall be applied to all loans released until June 30, 2003. The interest rates shall be reviewed and set every quarter by a GFI committee.