What is the BSP's objective in issuing Circular No. 1156(the Guidelines on the Adoption of the Standard Business Loan Application Form or the "Guidelines")?
The BSP wishes to promote broad and convenient access to high quality financial services by mandating the adoption of a standard business loan application form ("SBLAF") to facilitate transparency, ease of understanding, efficiency in loan applications and processing. The SBLAF is designed to make the loan application process streamlined and borrower-friendly for its target users, i.e., micro, small, and medium enterprises (MSMEs). MSMEs are generally defined by the BSP as enterprises engaged in any business activity within the major sectors of the economy, i.e., industry, trade, services, the operation of tourism-related establishments, and agribusiness, and whose total assets are less than PhP100 million (see Section 332 of the BSP's Manual of Regulations for a more specific definition of MSMEs).
What is the SBLAF?
The SBLAF refers to the templates prescribed by the BSP for loan
applications. These applications serve as the primary application
screening tools to be accomplished by the borrower.
The SBLAF templates have two components: (i) the borrower
information sheet; and (ii) the list of supporting documents.
Copies of the SBLAF templates currently applicable may be accessed
through this link.
Which entities and transactions are covered by the
Guidelines?
The Guidelines apply to all BSP-supervised financial institutions
(BSFIs) that offer business loans to applicant-borrowers (each such
BSFI, a "covered entity"):
a. banks and their subsidiary/affiliate financing and leasing
companies;
b. Government Non-Bank Financial Institutions; and
c. Financing/leasing companies with Quasi-Banking license that are
not subsidiaries of banks.
Additionally, the Guidelines provide that the SBLAF templates
should be used for loan applications that meet the following
conditions (each such application, a "covered loan
application"):
a. the applicant-borrower must be a sole proprietorship (or natural
person), partnership, cooperative, or corporation that is
classified as an MSME or start-up proposing to do business;
b. the purpose of the loan should be the financing of business
operations and capital expenditures. Credit accommodations for
non-business or personal purposes such as education,
hospitalization, emergency, travel, household and other personal
consumption needs are not covered by the guidelines; and
c. the loan may be either be secured or unsecured.
May covered entities amend the SBLAF templates, or use other forms when processing covered loan applications?
The Guidelines prohibit covered entities from using forms other than the SBLAF templates in processing covered loan applications (regardless of whether the application in question is a new loan application, an additional loan application, or an application for the renewal or restructuring of existing loans). Covered entities are also prohibited from modifying the templates.
The SBLAF templates can be made available in printed form and/or electronic form, as applicable. The electronic forms must contain the same data fields which shall be in the same presentation order to the extent practicable; consent statements; and list of supporting documents as in the printed forms.
May e-signatures be used on the electronic forms?
Yes, e-signatures may be used to authenticate or provide consent in the electronic forms (subject to compliance with the E-Commerce Act and other applicable rules).
May covered entities request additional information
and supporting documents?
Yes, on a case-to-case basis, covered entities may request
additional information and supporting documents commensurate to the
borrower's risk profile, consistent with sound credit risk
management practices and customer due diligence measures.
What are the other obligations of covered entities
under the Guidelines?
They must electronically submit quarterly and annual reports to the
Department of Supervisory Analytics of the BSP. A covered entity
that submits erroneous and/or delayed reports, or which fails to
timely submit required reports, may be penalized with a fine
ranging from PhP300-PhP600 per report. Moreover, the BSP may deploy
enforcement actions and impose sanctions on the BSFI and its
directors, officers and/or employees concerned to ensure compliance
with the Guidelines.
Read the latest Banking Bulletin here or via this link.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.