Revised QUEDANCOR Loan Security Requirements

QUEDANCOR strengthens and standardizes loan security requirements to ensure good repayment on loans and intensify collection of loan receivables.
QUEDANCOR implements a credit support mechanism and reliable guarantee system that supports its countryside development investment blueprint.
QUEDANCOR ensures a steady source of loanable funds through effective management of loan receivables and borrowed funds.

The guideline covers all QUEDANCOR borrowers under its various financing programs.
The guideline applies to QUEDANCOR borrowers except the following:
- IAL Program for Government Employees
- NCB Card Program
- Inventory Financing Programs
- All other programs with existing Memorandum of Agreement as to source of funds/co-program implementors, with pre-arranged provisions on loan collateral or security requirements, such as:
  - Dairy Program
  - CDA-CLP Program
  - Livecor Agri-Aqua Equipment Leasing Program
  - Palay Warehouse Receipt Program
  - Other Special Programs
The Circular’s security requirements apply based on the borrower type (group vs. individual; entity vs. non-entity) and on the loan amount threshold of P 50,000.00.

QUEDANCOR applies standardized security requirements for SRT and for Individual Borrowers (Entity and Non-Entity).
The Circular uses the loan amount cut-off of P 50,000.00 to determine the minimum required security.

For SRT loans up to P 50,000.00, QUEDANCOR requires:
- Joint and Several Signatures (JSS) of members of the SRT group; and
- A Deed of Assignment of Receivables supported by a Marketing Contract/Agreement, if applicable.
For SRT loans above P 50,000.00, QUEDANCOR requires:
- Joint and Several Signatures (JSS) of members of the SRT group;
- A Deed of Assignment of Receivables supported by a Marketing Contract/Agreement, if applicable; and
- A loan guarantee from the participating LGU or Buyer-Firm/IS.

For Individual Borrowers (entity and non-entity) with loans up to P 50,000.00, QUEDANCOR requires:
- Continuing Deed of Assignment of Stocks-in-Trade with a Trust Receipt Agreement for Food/Market Retailers/Sari-Sari Stores, or a Deed of Assignment of Receivables supported by a Marketing Contract/Agreement, if applicable; and
- Co-Maker/s.
For Individual Borrowers with loans above P 50,000.00, QUEDANCOR requires:
- At least 80% REM, or at least 80% combination of REM, Non-Interest Bearing Cash Trust Fund, Bank/Time Deposits, LandBank/Government Bonds/Securities and similar investments; and
- A Deed of Assignment of Receivables supported by a Marketing Contract/Agreement, if applicable.
Individual borrowers must have an equity equivalent to at least 20% of the total project cost to be eligible.
The borrower’s equity may be in the form of agri-fishery machinery and equipment, inputs or labor.

Borrowers except LGU, National Government Agencies, and Government Owned and Controlled Corporations must issue post-dated checks (PDCs) to cover all loan amortizations.
Corporations, Cooperatives, Federations, Associations, and other entities with juridical personality must execute Joint and Several Signatures (JSS) of Officers or authorized representative/s.

QUEDANCOR applies the following valuation percentages as the basis of valuation for each type of security:
Real Estate Mortgage is valued at 100% of Appraisal Value.
Cash Bond is valued at 100% of Cash Value (in Php).
Deed of Assignment of Liquid Risk-Free Assets is valued as follows:
- Cash/TDs/Government Securities at 100% of Cash Value
- Accounts Receivables at 70% of Outstanding Principal
- Inventories/Stocks-in-Trade at 70% of Cash Value
Deed of Assignment of Internal Revenue Allotment is valued at 70% of the free/alienable % of the gross revenue.
Deed of Assignment of Acceptable Shares of Stocks is valued at:
- 70% of current/face value of Non-Blue Chips shares of stock or 80% if Blue Chips
- The valuation is based on whether the shares are Blue Chips or Non-Blue Chips.
Deed of assignment of Landbank and other government bonds is valued at 100% of Face Value.

Loans up to P 50,000.00, whether for SRT or individual, must be covered by 100% Group Credit Life Insurance (GCLI).
For loans above P 50,000.00, SRT borrowers, individual farmers, fisherfolk, agri-fishery workers, government/urban and rural workers, sole proprietors and partners, and designated officers/representatives/stockholders signing JSS and P.N.s on behalf of entities such as corporations, cooperatives, associations, federations, NGOs, and similar entities with juridical personality (except LGU) must secure a GCLI for the unsecured portion of their loans.
The unsecured portion is the portion not covered by:
- Real Estate Mortgage (REM)
- Non-Interest Bearing Cash Trust Fund
- Deed of Assignment of Liquid Risk-Free Assets
- Deed of Assignment of Acceptable Shares of Stocks in government/private corporations/Bonds and other related investments
- Deed of Assignment of Receivables (for Special Programs)
- Deed of Assignment of Stocks-in-Trade/Inventories (for Food/Market Retailers/Sari-Sari Stores)
- and other related securities.

The Circular supersedes Memorandum Circular No. 321 dated 01 September 2004.
The Circular covers loan applications filed and received by QUEDANCOR starting 01 July 2005.
QUEDANCOR adopts the Circular on 31 May 2005.