One of the major factors in production is funding; while some fishpond operators have enough, others do not have sufficient funds in the construction, improvement, and maintenance of their fishponds. Considering the potentials of the fishery resources on our economy, the government has launched a program towards increasing fishpond productivity by extending financial assistance to fishfarmers. Government financing institutions are principally involved; however, only the Development Bank of the Philippines and the Central Bank of the Philippines (through the rural banks) have issued implementing guidelines governing the operations of this program.
7 DBP Guidelines for Fisheries Industry Loan Program, DBP, Makati
A borrower may be an individual, partnership, cooperative, association, or private corporation that is presently engaged in the business of inland fishery production and desires to extend current operations; or one who proposes to engage in a new inland fishery project and can demonstrate his capabilities to undertake such a project successfully.
If the borrower has an existing account with the DBP such account shall not be in arrears.
The borrower may be a holder of a Fishpond Lease Agreement of the area on which the project is to be established, or he may be a private owner thereof.
The purpose of the loan is to finance:
the construction of new fishpond for fishfarming
for expansion and rehabilitation of existing fishponds usually in the clearing of the project area
construction of dikes and gates
construction and excavation of the different pond compartments
construction of caretaker's guardhouse
purchase of fish stock, fertilizers and equipment.
The amount of loan to be extended depends on the technical evaluation of the project as to its feasibility and economic viability. Usually the completed Application of Agricultural Loan Form (Appendix E) is accompanied with a Project Feasibility Study as one of the requirements.
For a “bangus” fishpond project, the loan can not exceed 80% of the appraised value of the property which is offered as collateral. If this is not sufficient the borrower may offer other real properties as additional security. Loans for this purpose, however, are limited to projects not exceeding five (5) hectares.
All borrowers are required to make a minimum contribution towards the incremental investment costs of the project to be financed, in the following proportions to the area of ponds to be developed:
| Size of Ponds | Contribution |
| Up to 10 hectares | 10% |
| More than 10 hectares & up to 25 ha. | 15% |
| More than 25 hectares | 20% |
If the project site is privately-owned, whether titled or untitled, the property shall be mortgaged in favor of the DBP; or
If the project site is covered by a lease hold agreement from the Philippine Government, leasehold rights thereon shall be assigned in favor of the DBP. All durable assets procured or acquired out of loan funds shall be chattled in favor of the bank.
The term of repayment, including grace periods, shall be based on the paying capacity of the borrower and the estimated cash flow of the project to be financed. In general, repayment terms and grace period shall not exceed the following:
| Project | Grace Period | Term of Repayment (excluding grace) |
| Project Rehabilitation | 2 – 3 | 5 – 7 |
| Development of Existing fishponds | 3 – 4 | 7 – 9 |
| Construction of New Fishponds | 3 – 4 | 10 – 12 |
Operating cost portion of loans for “bangus” fishpond production shall be payable within two (2) years in semi-annual amortizations.
The rate of interest shall not be less than 12% per annum.
Under the Supervised Credit financing scheme, the fisherman-borrower agrees in writing that he will apply proven fishfarm/fishing practices necessary to improve fish production and abide by the approved fisheries plan and budget jointly prepared by him and a duly accredited fisheries extension worker. It is a system of lending which combines adequate and timely credit to fisheries project and home management guidance under a trained technician.
| Project | Loan Limit | Maximum Area |
| “Bangus” culture |  3,000/ha. | 5 hectares |
| Combination of “bangus” & “sugpo” culture | 4,500/ha. | 4 hectares |
Experienced fishpond operator managing not more than 5 hectares of fully developed fishponds.
Loans extended shall be secured by chattel mortgage of stocked fish and other fishery products, and/or project-financed and/or any person acceptable to the rural bank as co-borrower.
Loans granted by the rural bank from the Special Time Deposits (STD) shall be automatically guaranteed by the funds up to the extent of 85% of the losses due to force majeure or fortuitious events such as typhoons, floods and other causes beyond the capacity of the borrower to control and upon certification of the BFAR fisheries technician, subject to the verification of the CB-Credit Supervisors assigned in the area.
Guarantee coverage - Fisheries loan granted by the rural banks to fishpond operators shall be eligible for guarantee coverage to be provided by the Land Bank of the Philippines, provided that the application to avail of the guarantee shall follow the Land Bank's ruling and policy on the matter.
The policy of the Central Bank on guarantees shall be followed strictly. The lender rural bank is the one guaranteed against losses.
In case of force majeure or fortuitious events, the participating rural bank, after being informed of the losses, shall re-schedule payment of the loans of the affected borrowers under the fisheries supervision program. A new loan shall be granted immediately, on a case-to-case basis, so as to enable the borrower to produce and pay the new and restructured loan.
The applicant-borrower, with the assistance of the fisheries extension worker, will prepare fishery plan and budget of the project to be financed;
The supervised credit fisheries extension worker will submit the list of prospective borrowers indicating the project to be financed, area, amount of loan and date needed;
The supervised credit fisheries extension worker will submit the accomplished fishery plan and budget to the rural bank management for approval. The plan and budget should include a marketing tieup with a reputable fish broker in the locality acceptable to the rural bank.
Fishpond operator, a selda damayan9 member shall apply for a loan;
The fishpond operator with the assistance of the fisheries extension worker shall prepare all the necessary loan documents for submission to the rural bank for appropriate action;
To encourage group action for increased fish production, fisheries extension workers will organize the fishpond operators into selda damayan units. The member will co-sign for one another in the application and promissory note.
Loan budget will depend on the requirements of the project to be financed under the short-term loan for fisheries financing program;
Loan releases will be synchronized with the credit needs of the project based on the fishery plan and budget.
All withdrawals from the SSD will have to be countersigned by the fisheries extension worker assigned in the area to guarantee that the amount withdrawn will be used on the project being financed and in accordance with the prepared fishery plan and budget.
The rural bank will issue a booklet of purchase orders (PO) or chits to the fisheries extension workers;
The Fisheries Provincial Program Officer (PPO) or Fertilizer Industry Authority (FIA) Coordinator shall issue fertilizer coupons to Fisheries extension workers;
The PO or chits will be good for only 15 days; the borrower end-user must draw the input from the dealer within the indicated period. Subject to the recommendation of the fisheries extension worker and approval of the rural bank management, the PO or chit may be revalidated. The fisheries extension worker shall surrender the stubs of unused PO to the rural bank and unused fertilizer coupons to the FIA Coordinator;
The fishpond operator-borrower shall bring the PO to the rural bank for the signature of the bank manager after which the bank shall stamp the PO with the RB seal;
The fishpond operator-borrower shall present the PO to the dealer in the area, withdraw inputs and sign sales invoice and delivery receipts.
Each loan application shall be evaluated individually by the bank-applicant before the application is transmitted to the Central Bank for final action;
The bank shall review the evaluated list of applicants in the light of each knowledge of the credit requirements in the area and shall advise the applicant bank of its action within a week;
The bank shall forthwith make special time deposits based on approved requests and its deposits shall be covered by a time deposit certificate;
The special time deposit shall be co-deposited with the loan granted out of said deposits provided however, that as installments or payments are received from the borrowers, said installments or payments shall be remitted to the Central Bank and returned to the fund;
The applicant-bank should release the loan within one (1) month from receipt of deposit after which it shall submit to the bank the list of borrowers to whom the loans were extended;
The applicant-bank should credit the time deposit with interest at the rate of 6% per annum;
Loans extended by the applicant-bank to farmer-borrowers shall be charged an effective interest not exceeding 12% per annum.
All loans granted by the rural banks to the applicants for fisheries projects under the short-term special financing for fisheries production and development shall be eligible for guarantee coverage and chargeable against the fund, provided, that the application to avail of the guarantee shall follow Central Bank's ruling and policy on the matter;
In the event of default in the payment of guaranteed loans, applicant-bank should take all the necessary measures to recover the loan before applying for payment of losses sustained under the guaranteed loan. The bank should satisfy itself that all possible measures have been taken to minimize loss from guaranteed loans.
Loans should be granted for a term not exceeding one (1) year.
Loans for fishpond shall be paid on or before the maturity date of the income realized (Appendices G and H).
