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(NAR) VOL. IV NO. 2 / JANUARY - APRIL 1993
[ CDA RESOLUTION NO. 70 s.1991, November 18, 1991 ]
COOPERATIVE DEVELOPMENT LOAN FUND POLICIES AND PROCEDURES BACKGOND
By virtue of Section 10 of R.A. 6939, CDLF was transferred from the Department of Agriculture to the Cooperative Development Authority. CDA has decided to adopt the purposes and uses of CDLF as contained in Section 6 of P.D. 175. Section 6 of P.D. 175 created the Cooperative Development Loan Fund (CDFL). The funds may come from 1) general appropriations; 2) proceeds from sales of US Public Law 480 commodities; (3) foreign loans or proceeds of sales of commodity loans; (4) grants and donations; (5) levies imposed by existing laws on agricultural commodities for the development of cooperatives; and (6) such other sources as are now provided by existing laws or maybe provided for in the future. This fund may be utilized for (1) loans for cooperatives; (2) guarantee for loans granted to cooperatives; and (3) advances to cooperatives for the purchase of equity of rural banks. This fund was administered by a Management Committee which prescribed rules and regulations for its utilization.
SECTION 1. Objectives of CDLF —
a) To promote the development of agro-industrial sub-sector of the cooperative sector, and
b) To finance cooperative institutions.
SECTION 2. General Loaning Policies and Operations — The basic loaning policy is to provide cooperatives with funds adequate for their needs and purposes and on terms the borrowers can reasonably be expected to achieve, provided there are adequate justifications and the borrowers have the repayment capacity.
SECTION 3. Types of Loans — The fund may be loaned out to cooperatives to meet their operational and business requirements. The following are the types of loans that may be extended under the CDLF:
1. Marketing Loan. This loan to cooperatives is intended for the purchase of agricultural products of members of agricultural supplies and inputs for distribution to members. This is primarily designed for agricultural cooperatives as well as agribased cooperative federations.
2. Operating Loan. This loan is for the administrative and operating expenses of borrower cooperatives usually based on planned and approved business activities.
3. Facility Loan. This loan is for the purchase, construction, repair and installation of facilities required by cooperatives of farmers and fisherfolk. This will enable the borrower cooperatives to engage in agribusiness activities which are usually lucrative and profitable.
4. Land/Building Loan. This loan is for the purchase of land on which to construct building or for the construction of building.
5. Investment Loan. This loan is for investment by borrower cooperatives in activities or enterprises connected with and in furtherance of the cooperative program such as investment on Cooperative Banks and subsidiary corporations.
SECTION 3. Eligible Borrowers — The following may borrow from the CDFL:
1. Federation of agribased and non-agribased cooperatives
2. Area Marketing Cooperatives
3. Cooperative Rural Banks/Cooperative Banks
SECTION 4. Specific Terms and Conditions —
1. Amount of Loan — The amount of loan is determined on a case to case basis, depending upon actual needs and capacity of the cooperative to absorb and use the loan proceeds.
2. Security of Loan -
a) Generally, the security for the loan shall be the total assets of the borrower cooperative.
b) CDA may, however, require specific security such as property or facility, stocks or inventory to be acquired or contracts that may be entered into resulting from the loan.
c) Guarantee from the officers.
3. Schedule of Releases — Loans shall be released in full or in partial amounts of the actual needs as reflected in the approved project feasibility study.
4. Interest Rates —
a. Marketing Loan — not less than sixteen per centum (16%) per annum
b. Operating Loan — not less than fourteen per centum (14%) per annum
c. Facility Loan — ten per centum (10%) per annum
d. Land/Building — eight per centum (8%) per annum
SECTION 5. Terms and Repayment Schedule —
1. Marketing Loan — Maximum of one (1) year with a credit line of a maximum of two (2) years subject to review every six months. Borrowers of this type of loan should show proof of satisfactory operating performance.
The CDLF may ask for immediate payment of the loan if the borrower is found to have violated any terms and conditions of the loan agreement.
2. Operating Loan — Same as marketing loan.
3. Facility Loan — Maximum of ten (10) years, depending on the facility to be acquired. Amortization may be on a quarterly, semi-annual or annual basis. Grace period may be allowed depending on the facility being financed.
4. Land/building Loan — Maximum of fifteen (15) years. On the principal of this loan, a grace period might be allowed for a period from 1-3 years. Thus, repayment on the principal shall start after the grace period. However, payment of interest shall be made annually starting on the first year after release of the loan.
The terms and conditions of the loan may be changed by the CDA Administrators, except those contracts already entered into.
Payments on interest and principal shall be made direct to the CDA.
SECTION 6. Documentary Requirements —
1. Application for loan.
2. Project feasibility study, which shall present a picture of the purpose and operation of the loan, loan budget, cash flow and schedule of releases as well as repayment schedule. FIRR, B/C ratio and ROI will be shown in the study.
3. Resolution of the general assembly of the borrower cooperative authorizing the Manager/Board of Directors to apply, negotiate, contract and sign for the loan with the CDA. Such resolution shall be certified by the Chairman and Secretary of the cooperative.
SECTION 7. Other Conditions Attached to the Approval of the Loan —
1. The borrower cooperative shall contribute an equity of not less than 10% of the total cost of the project.
2. CDA shall conduct a background information and credit investigation of the borrower cooperative.
3. CDA may assign a staff member to monitor compliance with the loan agreement.
4. The borrower shall submit to CDA quarterly reports on actual operations supported by monthly cash disbursement, inventory reports and quarterly financial statements.
5. Waiver of notices.
CDLF Policies on Loan Guarantees
I
Types of Loans that may be Guaranteed
The following are the types of loans that may be guaranteed by the CDLF:
1. Marketing Loan — for the purchase of agricultural products of members and agricultural supplies and inputs for distribution to members.
2. Facility Loan — for the purchase, construction, repair, and/or installation of facilities.
II
Cooperatives whose Loans may be Guaranteed
1. Federation of agribased and non-agribased cooperatives.
2. Area Marketing Cooperatives.
3. Cooperatives Rural Banks/Cooperative Banks.
III
Specific Terms and Conditions
1. CDA guarantees and secures repayment of up to 80% of the principal of the loan granted.
2. Payment of guarantee shall be made within 30 days from the presentation by the lending institutions to the CDA of its claim of non-payment of due and unpaid loans, or amortizations thereof, provided that the lender shall exert all extra judicial efforts to collect the loans extended and that proof to this effect shall accompany the claims to the CDA.
3. The CDLF shall charge a guarantee from 1-3% per annum depending on the amount of loan.
IV
Requirements
1. Application for guarantee with the CDA.
2. Feasibility study, which shall include a loan budget, cash flow and schedule of releases.
3. Resolution of the Board of Directors of the borrower cooperative:
a. Authorizing the incurring of such indebtness;
b. Seeking the guarantee of the CDA; and
c. Designating the representative of the cooperative to negotiate and contract for the loan and the guarantee thereof.
4. The cooperative shall submit quarterly financial statements showing disbursements, inventory reports, including repayments.
5. CDA shall conduct a background information and credit investigation of the borrower cooperative.
6. Other reports required by R.A. 6938 and CDA rules.
V
Cooperative Rehabilitation and Development Loan Fund (CRDLF)
These loaning and guarantee policies and procedures shall apply to the CRDLF.
VI
Administration of CDLF and CRDLF
These funds shall be administered by the CDA Board of Administrators.
Adopted: 18 Nov. 1991
(Sgd.) EDNA E. ABERILLA
Chairperson
SECTION 1. Objectives of CDLF —
a) To promote the development of agro-industrial sub-sector of the cooperative sector, and
b) To finance cooperative institutions.
SECTION 2. General Loaning Policies and Operations — The basic loaning policy is to provide cooperatives with funds adequate for their needs and purposes and on terms the borrowers can reasonably be expected to achieve, provided there are adequate justifications and the borrowers have the repayment capacity.
SECTION 3. Types of Loans — The fund may be loaned out to cooperatives to meet their operational and business requirements. The following are the types of loans that may be extended under the CDLF:
1. Marketing Loan. This loan to cooperatives is intended for the purchase of agricultural products of members of agricultural supplies and inputs for distribution to members. This is primarily designed for agricultural cooperatives as well as agribased cooperative federations.
2. Operating Loan. This loan is for the administrative and operating expenses of borrower cooperatives usually based on planned and approved business activities.
3. Facility Loan. This loan is for the purchase, construction, repair and installation of facilities required by cooperatives of farmers and fisherfolk. This will enable the borrower cooperatives to engage in agribusiness activities which are usually lucrative and profitable.
4. Land/Building Loan. This loan is for the purchase of land on which to construct building or for the construction of building.
5. Investment Loan. This loan is for investment by borrower cooperatives in activities or enterprises connected with and in furtherance of the cooperative program such as investment on Cooperative Banks and subsidiary corporations.
SECTION 3. Eligible Borrowers — The following may borrow from the CDFL:
1. Federation of agribased and non-agribased cooperatives
2. Area Marketing Cooperatives
3. Cooperative Rural Banks/Cooperative Banks
SECTION 4. Specific Terms and Conditions —
1. Amount of Loan — The amount of loan is determined on a case to case basis, depending upon actual needs and capacity of the cooperative to absorb and use the loan proceeds.
2. Security of Loan -
a) Generally, the security for the loan shall be the total assets of the borrower cooperative.
b) CDA may, however, require specific security such as property or facility, stocks or inventory to be acquired or contracts that may be entered into resulting from the loan.
c) Guarantee from the officers.
3. Schedule of Releases — Loans shall be released in full or in partial amounts of the actual needs as reflected in the approved project feasibility study.
4. Interest Rates —
a. Marketing Loan — not less than sixteen per centum (16%) per annum
b. Operating Loan — not less than fourteen per centum (14%) per annum
c. Facility Loan — ten per centum (10%) per annum
d. Land/Building — eight per centum (8%) per annum
SECTION 5. Terms and Repayment Schedule —
1. Marketing Loan — Maximum of one (1) year with a credit line of a maximum of two (2) years subject to review every six months. Borrowers of this type of loan should show proof of satisfactory operating performance.
The CDLF may ask for immediate payment of the loan if the borrower is found to have violated any terms and conditions of the loan agreement.
2. Operating Loan — Same as marketing loan.
3. Facility Loan — Maximum of ten (10) years, depending on the facility to be acquired. Amortization may be on a quarterly, semi-annual or annual basis. Grace period may be allowed depending on the facility being financed.
4. Land/building Loan — Maximum of fifteen (15) years. On the principal of this loan, a grace period might be allowed for a period from 1-3 years. Thus, repayment on the principal shall start after the grace period. However, payment of interest shall be made annually starting on the first year after release of the loan.
The terms and conditions of the loan may be changed by the CDA Administrators, except those contracts already entered into.
Payments on interest and principal shall be made direct to the CDA.
SECTION 6. Documentary Requirements —
1. Application for loan.
2. Project feasibility study, which shall present a picture of the purpose and operation of the loan, loan budget, cash flow and schedule of releases as well as repayment schedule. FIRR, B/C ratio and ROI will be shown in the study.
3. Resolution of the general assembly of the borrower cooperative authorizing the Manager/Board of Directors to apply, negotiate, contract and sign for the loan with the CDA. Such resolution shall be certified by the Chairman and Secretary of the cooperative.
SECTION 7. Other Conditions Attached to the Approval of the Loan —
1. The borrower cooperative shall contribute an equity of not less than 10% of the total cost of the project.
2. CDA shall conduct a background information and credit investigation of the borrower cooperative.
3. CDA may assign a staff member to monitor compliance with the loan agreement.
4. The borrower shall submit to CDA quarterly reports on actual operations supported by monthly cash disbursement, inventory reports and quarterly financial statements.
5. Waiver of notices.
I
Types of Loans that may be Guaranteed
The following are the types of loans that may be guaranteed by the CDLF:
1. Marketing Loan — for the purchase of agricultural products of members and agricultural supplies and inputs for distribution to members.
2. Facility Loan — for the purchase, construction, repair, and/or installation of facilities.
Cooperatives whose Loans may be Guaranteed
1. Federation of agribased and non-agribased cooperatives.
2. Area Marketing Cooperatives.
3. Cooperatives Rural Banks/Cooperative Banks.
Specific Terms and Conditions
1. CDA guarantees and secures repayment of up to 80% of the principal of the loan granted.
2. Payment of guarantee shall be made within 30 days from the presentation by the lending institutions to the CDA of its claim of non-payment of due and unpaid loans, or amortizations thereof, provided that the lender shall exert all extra judicial efforts to collect the loans extended and that proof to this effect shall accompany the claims to the CDA.
3. The CDLF shall charge a guarantee from 1-3% per annum depending on the amount of loan.
Requirements
1. Application for guarantee with the CDA.
2. Feasibility study, which shall include a loan budget, cash flow and schedule of releases.
3. Resolution of the Board of Directors of the borrower cooperative:
a. Authorizing the incurring of such indebtness;
b. Seeking the guarantee of the CDA; and
c. Designating the representative of the cooperative to negotiate and contract for the loan and the guarantee thereof.
4. The cooperative shall submit quarterly financial statements showing disbursements, inventory reports, including repayments.
5. CDA shall conduct a background information and credit investigation of the borrower cooperative.
6. Other reports required by R.A. 6938 and CDA rules.
Cooperative Rehabilitation and Development Loan Fund (CRDLF)
These loaning and guarantee policies and procedures shall apply to the CRDLF.
Administration of CDLF and CRDLF
These funds shall be administered by the CDA Board of Administrators.
Adopted: 18 Nov. 1991
Chairperson