The Small Business Guarantee and Finance Corporation (SBGFC) and the Guarantee Fund for Small and Medium Enterprises (GFSME) were merged through Executive Order 28 and became known as the Small Business Corporation. Ms. Zorayda Amelia Alonzo became its Chairman and CEO and Mr. Benel P. Lagua as President and COO.
SBGFC was created on 24 January 1991 under Republic Act 6977, (as amended by Republic Act 8289). The Corporation was given a mantle of authority to offer a wide range of financial services, specifically for small and medium enterprises engaged in manufacturing, processing, agribusiness (except crop level production) and services (except trading). These financial services include among others guarantee, direct and indirect lending, financial leasing, secondary mortgage, venture capital operations and the issuance of debt instruments for compliance with the mandatory allocation provision.
Aside from the creation of SBGFC, the law likewise has the following significant provisions: a.) the creation of the Small and Medium Enterprise Development (SMED); b.) the mandatory allocation of credit resources to small enterprises; and c.) the rationalization of government assistance programs and agencies concerned with the development of SMEs. SBGFC commenced its operations on July 16, 1992. It is attached to the Department of Trade and Industry and is under the policy, program and administrative supervision of the Small and Medium Enterprise Development (SMED) Council.
At the time of the merger, GFSME was a guarantee fund operated independently by a Management Committee and professional staff under the Livelihood Corporation, a corporation attached to the Office of the President of the Philippines. GFSME’s services were restricted to offering of guarantee services to participating financial institutions lending to SMEs from the time it started commercial operations in 1984.
The merger of the two government financial institution was proposed by DTI Secretary Mar Roxas to create a more effective financial institution better geared to meet the needs of the SME market. With the merger, the National Government became the single biggest stockholder of Small Business Corporation.
As provided for under RA 6977, Small Business Corporation has an authorized capital stock of P5 billion with the initial capitalization of P1 billion in the form of equity investments in common and preferred stocks with each of the five government financial institutions contributing P 200 million.
