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.
For further information, please contact:
Philbert E. Varona, Partner, SyCip Salazar Hernandez & Gatmaitan