ERCA-RCEF

Expanded Rice Credit Assistance under the

Rice Competitiveness Enhancement Fund
 Program Objectives
• To provide a simplified lending program with streamlined
requirements and shorter processing time

• To make financial services and literacy available to Filipinos in the

agricultural and rural area through access to formal credit

• To ensure food security and improve viability , efficiency and

competitiveness of the agricultural sector and at the same time
uplift the lives of marginalized farmers
 Eligible Borrowers

1. Individual rice farmers

2. DA-accredited cooperatives with rice farmers as

members
Eligibility Criteria for Individual Farmers

• Registered in the RSBSA;

• No outstanding loan from formal lending institutions and DA-ACPC credit
conduits for the same project being applied for;
• Has undergone technical training from a reputable farm school/institution
on rice-related projects

Farmers which have already availed of assistance in the seed and mechanization
components are ineligible to avail of RCEF loans unless the loan being applied shall be
used to finance another rice-related project
 Eligibility Criteria for Cooperatives
• Duly registered with the CDA;
• Accredited by the DA;
• No adverse findings on the cooperatives and its principals;
• Should have strong back office support with defined Operational Structure;
• Must exhibit profitable operations and sound financial condition
• Past Due Loan Ratio not exceeding 15%;
• With Certificate of Compliance from CDA, if applicable;
• Has met the capital requirement of CDA or not less than ₱30,000.00;
• With proven track record or familiarity on the proposed project; and
• Has undergone technical training from a reputable farm school/institution on rice-
related projects
Cooperatives which have already availed of assistance in the seed and mechanization
components are ineligible to avail of RCEF loans unless the loan being applied shall be
used to finance another rice-related project
Eligibility Criteria for Member-Borrowers
(for relending/rediscounting)

• Registered in the RSBSA;

• Account has no history of default with the Cooperative for three
(3) consecutive months;
• Account for rediscounting is not yet fully paid
• Has undergone technical training from a reputable farm
school/institution on rice-related projects
 Borrower Eligible Purpose Loanable Amount

Individual 1. Purchase of farm inputs Up to 90% of the total project cost

Farmers/ 2. Acquisition of machineries and (TPC) but not to exceed P1.0 Million
Member equipment, including mechanical dryer
Borrowers
1. Purchase of farm inputs
2. Working capital
3. Acquisition of machineries and Up to 90 % of the TPC
Cooperatives
equipment, including mechanical dryer
4. Establishment of facilities

5. Relending to small rice farmers listed in Up to 90% of the total project cost
the RSBSA Rediscounting of existing loans
of small rice farmers listed in the RSBSA Up to 90% of face value of the sub-
PN or their outstanding balance in
current status, whichever is lower
 Scheme, Facilities and Interest Rate
Scheme Facilities Rates
Direct Lending Short Term Loan/Line, 2% p.a.
Term Loan
On-Lending Relending/Rediscounting 0% p.a. Effective pass-on rate to
end-borrowers shall not be more
than to 6 % p.a.

Project Cost Sharing

Component Cost Share
ERCA-RCEF Ninety Percent (90%)
Borrower’s Equity Ten Percent (10%)

Maybe granted, if applicable, based on the cash flow of the project.
Eligible Purpose
Production
Acquisition of Equipment
Establishment of Facilities
Relending/ Rediscounting
Grace Period
Loan Maturity
Tenor
two (2) years loan/line available via 180 days Promissory
Note (PN); roll-over may be allowed
shall depend on the projected cash flow but no longer than
seven (7) years
Shall depend on the projected cash flow but no longer than
ten (10) years
based on the maturity of sub-borrowers PN
 Loan Security/Conditions
1. For production
• PCIC insurance proceeds on crops, if applicable;
2. For acquisition of fixed assets
• Chattel mortgage on subject of financing; and
• Applicable insurance cover on the chattel financed, endorsed in favor of the
Bank
3. For establishment of facilities
Any or combination of the following, if applicable/case-to-case basis:
• Chattel mortgage on object of financing;
• Applicable insurance cover on the project financed, endorsed in favor of the
Bank;
• Real Estate Mortgage (REM)
 Loan Security/Conditions, cont.
4. For Conduits
• Assignment of sub-borrowers PNs including underlying collaterals, if any;

Any or combination of the following, if applicable/case-to-case basis:

• Assignment of sub-borrowers PNs including underlying collaterals, if any;

• REM;
• Chattel Mortgage; and
• Assignment of proceeds from insurance/guarantee claims, i.e. PCIC, AGFP
and CSF
• Applicable insurance cover on the chattel financed, endorsed in favor of the
Bank;
 Documentary Requirements
for Individual Farmers
1. Filled-out Loan Application Form
2. Photocopy of one (1) valid government-issued ID
3. Sworn affidavit and/or Certification of no outstanding loans from any
lending institution/DA-ACPC for the same project
4. Certificate of Training from a reputable farm school/institution on rice-
related projects
 Documentary Requirements for Coops
1. Loan Application
2. Certificate of Accreditation from DA
3. Photocopy of Certificate of Registration from the CDA
4. List of officers and employees in key positions
5. Bio-data of incumbent officers, employees in key positions and Board of Directors with ID;
6. Board Resolution authorizing the Coop to borrow and designating authorized signatories;
7. Audited Financial Statement (FS) for the last year; or, latest interim FS for start-ups;
8. Business Plan/Consolidated Farm Plan and Budget, if applicable
9. Current year Business Permit
10. Certificate of training from a reputable farm school/institution on rice-related projects
 Other Terms and Conditions
Mode of Release
Approved loan amount may be released on lumpsum or staggered basis

Pre- Release Requirement

The Borrower shall open an ATM/Current/Savings Account with DBP/LANDBANK

Conduct of Credit Information & Background

Investigation
 Required for Cooperatives
 May be waived for individual farmers, depending on loan amount
 Other Terms and Conditions
Standard Fees
Waived, except for the Documentary stamp tax (DST) applicable for coops to be
charged against the Program Fund

Restructuring/ Refinancing
May be allowed for loans affected by calamity as declared by the concerned LGU or the
National Government

Penalty
3% p.a. to start on the 61st day after due date of loan up to the date of settlement
DBP’s Approach
DIFFERENT
FINANCING MODELS
 ERCA - RCEF

SUPPLY CHAIN

FARMER COOP/SME
Production Post Harvest Market
(Product/crop)
• Consolidation • Wholesale
• Farm Inputs • Processing/Packaging • Retail
• Production • Transport

PAYMENT
PAYMENT SETTLEMENT

FUND TRANSFER

DIRECT CREDIT
Financing Model #1 – Production Loan thru Farmers’ Cooperative

Initiates linkage of the

farmers to Off-takers

Off-takers

Produces inputs needed by

the Off-taker Finance relending
activities of the
Cooperative

FARMER COOPERATIVE

Farmer Cooperative

Finance farm production

Farmer Farmer Farmer

Financing Model #2 – Working Capital Loan

Sells inputs to Off-

takers

Off-takers
Finance
Working
Capital
Farmer Cooperative

FARMER COOPERATIVE

Buys inputs from

the Farmers

Farmer Farmer Farmer

Financing Model #3 – Equipment Loan
LGUs

Provide technical and

maintenance support

Finance acquisition
of Equipment

Farmer Cooperative (Service Providers)

Provides mechanization for farm production

Farmer Farmer Farmer

Buys inputs Farmer Cooperative

Off-takers
Financing Model #4 – Loan for Establishment of Facilities

Finance
establishment of
Facilities

Uses facility for a

fee to produce rice
Farmers

Farmer Cooperative
Deals directly to the
Deals to the off- off-takers
takers
Buys produce
from Farmers

Local Market

Farmers

LGUs
Financing Model #5 – Contract Farming
 SUPPORTING
INCLUSIVE GROWTH
 How to get there?
Savings

Access to Credit

BANKED
UNBANKED
Payment

 Have no basic bank account  Have a transaction account

 Have no or restricted access  Have access to broad range

to financial services Insurance
of financial services
 Rely on a cash economy

Remittance
THANK YOU