The Guaranteed Fund

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The logo symbolizes a strong and reliable institution established to benefit the Filipino people by transferring the majority of the business risks of small and medium enterprises from the private financial institutions to the government.

Four major components of GFSME logo:

1. The Pentagon Shape The five sides of this pentagon symbolize the five major participants in the Guarantee Fund system: the Guarantee Fund, the Financial Institution, the Borrower, the Central Bank and the Investor;

2. The Five Bars The five bars leaning against each other to form the pentagon shape symbolize the interdependence of the five major participants;

3. The People the graphic representation of a multitude of people symbolizes the Filipino people in general who are the ultimate beneficiaries of the Guarantee Fund system; and

4. The Color Green This represents the natural resources which are the foundation of the small and medium enterprises. 


  • To serve entrepreneurs in the small and medium enterprise sector through the provision of a credit guarantee system and other supports, thereby encouraging greater participation of private financial institutions in the development of Filipino enterprises.

  • To encourage enterprises which are labor-intensive, export-oriented or import-substituting, increase government revenues or have other socio-economic impact.

  • To assist enterprises which make maximum use of local raw materials as well as those that utilize new technologies with strong commercial potentials.


The Guarantee Fund for small and Medium Enterprises (GFSME) then known as the KKK Guaranty Fund was established on April 12, 1983 through Letter of Instruction No. 1308 and was placed under the administration of the KKK Processing Center Authority, a corporation under the Ministry of Human Settlements. The GFSME therefore did not have a separate juridical personality of its own but rather derived its powers from KKK-PCA. The KKK-PCA is now more popularly known as the Livelihood Corporation.

The KKK National Secretariat was tasked to oversee the operations and administration of the Fund, in accordance with the KKK Guaranty Program guidelines and in coordination with the Central Bank, the accredited banks and other entities concerned. The KKK Processing Center Authority, on the other hand, was empowered to operate the KKK Guaranty Systems and accordingly was authorized to established working relationships with the public and private financial institution for the implementation of the program.

Implementing guidelines were promulgated by the issuance of Letter of Implementation No. 144 and the Memorandum Circular No. 001-4 of the President. Letter of Implementation No. 144 established the operational guidelines in implementing the guarantee program. MC No. 001-4, on the other hand, established the fund disbursement guidelines governing the efficient utilization of the KKK Funds specifically provided for the operationalization of the GFSME in the first quarter of 1984. It particularly provided that "the KKK processing Center Authority as the corporate arm of the KKK in implementing the Guarantee Fund, shall manage the P300 Million released by the National Treasury to be established as a Trust Account under its direct management." Given the limited size of the seed fund, and the priority assigned to agricultural development, the GFSME initially identified small and medium agricultural enterprises as its principal market area.

With the advent of the Aquino administration after the 1986 February Revolution, government reorganized the bureaucracy leading to the abolition of the Ministry of Human Settlements. The various agencies, including the KKK-PCA were transferred to the Presidential Management Staff of the Office of the President. The GFSME’s attachments was retained with the KKK-PCA.

Early in 1991, the GFSME ventured into opening a new guarantee facility for industries engaged in manufacturing, service and franchise activities. Thus, the Fund was transformed into a one-stop guarantee program serving almost all kinds of small and medium enterprises.


After almost seventeen (17) years of operations, the GFSME has sustained its premier role in the field of credit supplementation in the country. As of December 31, 2000, GFSME has granted guarantee coverage to a total of 2,479 accounts worth P6.212 Billion nationwide. With a seed capital of P300 Million given in 1983, this means that every peso of government resource made available for SMEs through the GFSME was able to support enterprises more than 21  times its worth over the years.

The following achievements were attained in GFSME’s operations:

  • P6.212 Billion of loans guaranteed
  • Balance agriculture/industry exposure
  • Focused guarantee operations unside-tracked by other product lines
  • Nationwide geographical dispersion with assistance in each region of the country
  • Working institutional linkages with Departments of Agriculture and Agrarian Reform as well as with LGUs
  • Strong support to the export and cooperative sectors
  • Provided interest subsidy and liquidity to SME loans
  • Payment of guarantee calls totaling P286.350 Million today
  • Institutional network of fifty four (54) accredited FIs with branches nationwide
  • Full payback of the original government investment of P300 Million via dividend remittances


1. Facilitated Credit Technology Transfer

The introduction of a guarantee mechanism provided banks with an easy entry into small and medium financing. A gradual transfer of technology was effected culminating in banks eventually putting up special lending units where none previously existed.

2. Served as Operating Model for Guarantee Operations

Both the Department of Agriculture and the Department of Trade and Industry have studied the GFSME system for possible duplication. The Department of Agriculture has likewise adopted the GFSME as one of the three agencies administering its guarantee programs.

3. Contributed to the Development of the Prawn Industry

At the time when traditional export products were suffering a downtrend, the GFSME through its accredited banks actively supported the development of the prawn industry. Our exposure to prwn accounts at one point in time reached a high of P327 Million.

4. Facilitated Support for Non-Traditional Agricultural   Projects

Aside from its support to the prawn industry when it was considered a new agriculture venture, the GFSME also spearhead the identification of non-traditional projects with vast potentials for credit support.These include black pepper, bullfrog, cutflower and asparagus production ventures.

5. Gained the Respect and Confidence of the Banking Industry

In a business where respect and confidence of the banking industry is primordial, the GFSME was able to cultivate in a short span of time the respect and confidence of the banking community in general and its accredited financial institutions in particular by honoring its commitment  in guarantee calls, subsidies and takeouts. Moreover, the Fund succeded in carving an image of government guarantee agency managed professionally and efficiently.

6. Established Regional Presence in Asia

The GFSME was a founding member in 1988 of the Asian Credit Supplementation Institution Confederation (ACSIC), the only association of credit guarantee institutions in Asia comprising those from Japan, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka, Korea, Nepal and the Philippines. ACSIC is a multi-national venue for resource sharing and credit guarantee technology and information exchange in the region.

In 1995, GFSME hosted the 8th ACSIC Conference, the first time this annual conference was held in the Philippines. GFSME likewise hosted the 11th ACSIC Training Programme on September 2000 held at the Asian Institute of Management Conference Center.


A Management Committee reports to the Board of Trustees of the Livelihood Corporation for the business operation of the GFSME. At the inception of GFSME, the Board of Trustees of the KKK-PCA created a separate Management Board for the Guarantee Fund to manage the Fund. The Management Board, however, was renamed Management Committee in 1996 to differentiate it from a real Board with corporate powers. At present the powers of the Management Committee are limited to approval of guarantees of up to P20 Million as well as policy matters relating to guarantee operations.

Heading the day-to-day operations of the GFSME is the Managing Director, ably assisted by the Deputy Managing Director. Operating Groups are as follows:

  • Finance and Administration Group
  • Credit and Evaluation Group
  • Business Development and Marketing Group
  • Account Administration Group
  • Planning and Management Services Group
  • Legal and Asset Management Group
  • Finance and Administration Group

One Liaison Office each is allocated for Luzon, Visayas and Mindanao, although at present, only the Visayas and Mindanao Area offices are operational.


The GFSME Management Committee reports to the Board of Trustees of the Livelihood Corporation for the business operations of the GFSME. Its authority includes the extension of guarantee cover of P20 Million and below, as well as the approval of all policy guidelines related to guarantee operations. It likewise exercises recommendatory powers to the Livecor Board on matters such as general policy formulation and operational budget.



The Office of the Managing Director provides executive direction and control of the entire operation of the GFSME. It is responsible for the implementation of policies, guidelines and programs approved by the Management Committee. It advises the Management Committee on vital matters affecting policies and operations of the Fund. It is also vested with several operating powers over key decisions on the program and operations of the GFSME.



The Office of the Deputy Managing Director assists the Office of the Managing Director in the direction and control of GFSME operations. It is particularly responsible in the design and implementation of new programs or products. It may be tasked with the responsibility of supervising certain GFSME groups. It attends to the general administrative requirements of the GFSME organization, which includes activities’ mobilization. It maintains close coordination with the Office of the Managing Director on matters regarding implementation of organizational policies, operating systems and procedures.



The group is primarily responsible for providing services related to strategic planning, industry research, development and implementation of the corporate public relations program and the management information systems.

PMSG is composed of two (2) departments: Planning and Corporate Affairs Department and the Management Information and Services Department.



The Group provides the GFSME with legal services relating to operations, contracts, among others, and the provision of services relating to the maintenance, management and disposition of assets acquired from erring or delinquent accounts.

The group is composed of two (2) units: the Legal Counsel and the Acquired Assets Management Unit.



The Group is responsible for providing the GFSME with financial advice and assistance on the matters relating to planning, formulation and implementation of financial and budget management, as well as custody and management of cash and investible funds with its corresponding securities. It is also tasked with the provision of services relating to human resource management and development and the various administrative services functions.

The group is composed of three (3) departments: the Comptrollership Department, the Treasury Department and the Administrative Department.



The Credit and Evaluation Group is responsible for the evaluation of proposals submitted by the accredited financial institutions and the packaging of accounts for guarantee approval/confirmation. It conducts credit investigation and does collateral inspection and appraisal functions.

The Group is composed of two (2) departments: the Accounts Evaluation Department and the Credit Investigation and Appraisal Department.



The Group is responsible for the development, management and operations of credit guarantee programs and facilities to small and medium entrepreneurs. It renders continuous research and development on credit guarantee programs that would directly address the needs of beneficiaries. It monitors progress of implementation of said programs, assesses/evaluates effectiveness of the same against planned targets and validates results for policy and review.

The Group is composed of two (2) departments: the Market Research and Policy Review department and the Product Development Department.



The Accounts Administration Group is tasked with the monitoring of accounts for guarantee validity, loan monitoring and loan documentation. It ensures that the guaranteed project remain viable until full payment of the loans and sees to it that the accounts are remedied before they become unmanageable. It evaluates restructuring proposals submitted by originating institutions and makes necessary recommendations for the approval of authorized officials. It handles remedial management of problem accounts. It may also provide extension services to borrowers in the fields of accounting, marketing and credit, especially remedial management.

The Group is composed of three (3) departments: the Luzon Accounts Department, the Visayas Accounts Department and the Mindanao Accounts Department.


The Liaison Offices are responsible for validating proposals submitted by accredited financial institutions in their respective areas of jurisdictions. They do credit investigation and loan appraisal functions. They are also responsible for the marketing of the GFSME program in the area and the monitoring and management of guaranteed accounts located in the area. They likewise perform functions as may be delegated by the Central Office.


At present, the GFSME maintains a lean and mean staff of 62 personnel inclusive of the requirements of the two area offices. Its key officers are the following:

BPL.gif (16554 bytes) BENEL P. LAGUA
Managing Director

Benel dela Paz  Lagua as Managing Director of GFSME, acts as the Chief Executive Officer. He assumed the Managing Director’s post on March 16, 1992 after a year’s stint as Deputy Managing Director of the GFSME.

Previous positions held include deputy program director of the Livelihood Development Group of then Ministry of Human Settlements, senior director of the Financial Intermediation and Resource Group of the Livelihood Corporation, and director of joint venture projects  with commercial banks and cooperatives.   His first government post was at the Presidential Management Staff, Office of the President, as senior presidential staff officer.

Lagua earned his Career Executive Service Eligibility  in August 1991and holds a Career Executive Senior Officer (CESO) Rank III. He is the topnotcher of the First Management Aptitude Test Battery conducted nationwide by the Career Executive Service Board in August 1990 and graduated from the DAP-CESDP XXI batch.  In 1997, he completed his masteral degree in public administration as an Edward S. Mason Fellow at the Kennedy School of Government, Harvard University in Cambridge, Ma., U.S.A. He finished a course in management engineering at the Ateneo de Manila University and then pursued a masters degree course in business management at the Asian Institute of Management as a PMS scholar.  He is  a candidate for Doctor in Business Adminstration at the De La Salle University.


FXP.gif (17135 bytes) FRANCIS X. PEREZ
Deputy Managing Director and Corporate Secretary

Deputy Managing Director of the GFSME since March 1992 and concurrently the Legal Counsel is Francis X. Perez. Before joining the Fund as legal counsel in 1989, Atty. Perez had once served as President of the United Admiral Savings bank. He also worked as Legal Counsel/Corporate Secretary in then Commercial Bank of Manila. He obtained his Bachelor of Laws degree from University of the Philippines and his A.B. degree from the Ateneo de Manila University. He also took an intensive Management Development Program at the Asian Institute of Management.

HMO.gif (17079 bytes) HECTOR M. OLMEDILLO
Director for Credit Evaluation

Of his ten years with GFSME, nearly seven of these have been spent with the Credit Evaluation Group which Hector M. Olmedillo presently heads. He joined the Fund in 1990 bringing him over 10 years banking experience, both from local and foreign institutions. He has attended seminars sponsored by local and foreign institutions on such topics as credit guarantee systems, organization and management of income-generating projects, import-export operations, client negotiations and credit packaging, among others.

Olmedillo holds a degree in business management from Ateneo de Manila University and is a candidate for a masteral degree in business administration at the University of Sto. Tomas.

VMH.gif (16497 bytes) VICTOR M. HERNANDEZ
Director for Business Development and Marketing

Tasked to handle the Fund’s overall marketing operations, Victor M. Hernandez also manages the GFSME area offices in the Visayas and Mindanao. He has earned over 25 years of public service in various management positions in project development and management. Special courses which he has attended locally and abroad include Asian management practices, export practices, cooperatives organization and rural development techniques, and social development. Previous work likewise includes a three-year college teaching stint and two-years’ research work at the Ateneo de Naga.

He obtained his degree in Economics from Ateneo de Naga College and pursued college studies in business at the De La Salle University. He also attended an advance course in Strategic Business Economics Program at the University of Asia and the Pacific.

ALS.gif (14591 bytes) ALICE L. SY
Director for Planning and 
Management and Services

Ms. Alice L. Sy oversees the entire corporate planning, research and corporate affairs functions as well as the management information system operations. She likewise provides technical support to the Office of the Managing Director.

She has earned over 10 years of public service involvement in the area of development planning, eight years of which are with the GFSME. She also had a brief stint with the China Banking Corporation. Seminars/courses she has attended here and abroad include those on import-export operations, business management for Asia and the Pacific Region, credit packaging, financial management and enterprise development.

A consistent top student since her elementary education, she graduated magna cum laude with a degree in Economics from De La Salle University.

Director for Finance and Administration and
Accounts Administration Group (concurrent)

Alfredo S. Dimaculangan, a Career Executive Service Eligible and a certified public accountant, takes charge of GFSME’s finance and administration and its accounts administration functions on a concurrent basis. He joined the GFSME in 1987 to handle finance and administration functions. Major positions he has held in the past include a stint with Urban Planners and Developers, Inc. as its controller and vice president for finance.

He finished a degree in accountancy magna cum laude at the San Sebastian College and took up MBA at the Ateneo Graduate School of Business.


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