REPUBLIC OF THE PHILIPPINES

PROVINCE O CAMARINES NORTE

MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297

CREDIT POLICY

Article I
DECLARATION OF POLICY
This policy paper provides guidelines governing the various loan products of the
Cooperative. The policy is aimed at securing members’ investments in the Cooperative.

Article II
ELIGIBILITY CRITERIA
The main objective of the Cooperative is to provide benefits to its members. Hence, the
loan products are specifically targeted to member needs. However, in order to
safeguard members’ investments in the Cooperative, only members in good standing
can avail of the Cooperative’s loan products.
To be a member of good standing, the following must be met:

1. The borrower has to be a bona-fide Regular or Associate Member of the

Cooperative.
2. The borrower has fully paid the Minimum Share Capital of Five Hundred Pesos
(P500.00) and Membership Fee of P200.00.
3. The borrower has no past due loan payments.
4. The borrower has actively contributed to share capital build-up.

Article III
LOAN ENTITLEMENT

1. Regular Members may avail at multiple loan products for as long as they meet
the following requirements:

1. No past due balances.

2. Their Share Capital build-up is active for the past three months.
3. The total monthly amortization of both loans will comply with any take-
home-pay policy of member’s employer.
4. Total outstanding balance of all loans does not exceed P200,000.00
except when fully secured by Share Capital.
5. The following loans are also exempt from the P200,000.00 outstanding
balance limit:
 REPUBLIC OF THE PHILIPPINES
PROVINCE O CAMARINES NORTE
MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297
2.
o
 Petty Cash Loan
 Emergency Loan

3. Associate Members may avail of Associate Member Loan up to 100% of their

Share Capital contribution.
4. All members are entitled to receive patronage refund from interest payments on
their loans.
5. Tenure, Co-Maker, and Share Capital requirements must be met as defined in
Article IV.

Article IV
LOAN PRODUCTS
Section 1. Loan Purpose. The Cooperative’s loan products are designed to meet
members’ financial requirements while also safeguarding their investments. Thus, co-
makers are required on certain loans as follows:
Loan Amount Co-Makers Needed
Up to P5,000.00 0
P5,001.00 to
1
P25,000.00
P25,001.00 and up 2
Note: There will be no Co-Makers needed if total loans (new + outstanding) is less than
or equal to the Share Capital of the Member-Borrower.
Section 2. Loan Terms. The Cooperative’s loan products differ from those offered in
the market. They are not available from traditional banking sources, they do not entail
expensive credit investigation, and they are processed quickly. Moreover, borrowers
earn patronage refunds from their loan interest payments which effectively lowers the
Coop’s interest rates further.

Loan Type Loan Loan Ceiling Diminishing Interest Effective Maximum

 REPUBLIC OF THE PHILIPPINES
PROVINCE O CAMARINES NORTE
MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297
Payment
Entitlement Rate Monthly Rate
Term

Petty Cash P5,000.00 P5,000.00 N/A 2% 1 month

Emergency P10,000.00 P10,000.00 16% 0.79% 6 months
Education 5 x equity P100,000.0018% 0.83% 12 months
Hospitalization5 x equity P100,000.0018% 0.83% 12 months
Note: Other special loans may be approved by the board from time to time.

Birthday Loan Table

BBAC Tenure Loan Entitlement Payment Term Co-Makers Needed
6 Months P10,000.00 6 Months 0
9 Months P15,000.00 6 Months 0
12 Months P20,000.00 12 Months 0
24 Months P25,000.00 12 Months 0
Notes: A member may avail of multiple loans but subject to the following conditions:

 Only one (1) outstanding loan allowed for Petty Cash and Birthday Loan.
 The total outstanding balance of all loans does not exceed P200,000.00 except
when fully secured by Share Capital.

Section 3. Tenure Requirement. All members/borrowers need to comply with the

following BBAC tenure requirement which is dependent on the amount of loan.
Loan Amount BBAC Tenure Requirement
Below 5,000.00 3 months
Above 5,000.00 6 months
10,000.00 up 9 months
Note: Any exception to the above will need BBAC Board approval.
Section 4. Interest Rates. The Cooperative’s loan products must be patterned after
market rates. This is to ensure the economic viability of the Cooperative. However,
these loan products cannot be offered in the formal financial markets because they
would be too expensive for these financial institutions to handle. But since the law
 REPUBLIC OF THE PHILIPPINES
PROVINCE O CAMARINES NORTE
MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297
mandates that annual net surplus of the Cooperative be returned to members in the
form of dividends and patronage refunds, this effectively lowers the interest rates. This
way, members get the benefit both by being the owners as well as the borrowers of the
Cooperative.
Section 5. Interest Rate Discount. To recognize members who have remained in good
standing with the Cooperative, a special interest rate discount is given to them based on
their Membership Level*.
Section 6. Retention Fund. As part of the Cooperative’s policy on capital build-up,
most of the loans borrowed from the Cooperative require a 10% Retention Fund. This
means that the borrower will have to add the equivalent of 10% of the loan into his
Share Capital Contribution, payable in equal payments throughout the duration of the
loan.
Section 7. Information Security. As the Cooperative is a separate entity from the
member’s employer, no employer confidential information including, but not limited to,
compensation, capacity to pay, etc., will be shared between employer and the
Cooperative. The Cooperative is taking all the risk in giving out loans to its members. As
such, to safeguard members’ equity, the Cooperative will require co-makers for its loan
products. Co-makers are jointly liable with the Maker (Borrower) of the loan. In case of
non-payment of the Maker, the Cooperative may go against the Co-maker to collect
payment.
Section 8. Documentation. In addition to the submission of a Loan Application Form,
some of the Cooperative’s loan products require additional documentation. This is to
ensure responsible use of the Cooperative’s credit facility.
Loan Type Documentation Required
Emergency Loan Proof of calamity, death, other fortuitous events
Educational Loan School’s billing statement or official receipt
Hospitalization Loan Hospital’s billing statement or official receipt

Section 9. Penalties. In addition to interest rate charged on past due balances, the
following penalties will be imposed on the borrower for delayed payments:
Past Due Penalty
The Coop will send a reminder letter to member (cc: co-makers)
Up to 30 days
Loan ceiling will be reduced to 2 x share capital
31-60 days The Coop will send a reminder letter to member (cc: co-makers)
 REPUBLIC OF THE PHILIPPINES
PROVINCE O CAMARINES NORTE
MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297
Penalty fee of 3% of monthly amortization
Loan ceiling will be reduced to amount of share capital contribution
Co-makers will be informed that past due balances may be charged to them
Penalty fee of 6% of monthly amortization
First demand letter from Coop’s legal counsel (cc: co-makers)
61-90 days
Loan availment will be suspended for 6 months after all loans have been paid
Loan amortizations may be transferred to co-makers
Penalty fee of 9% of monthly amortization
Second demand letter from Coop’s legal counsel (cc: co-makers)
91-120 days
Loan availment will be suspended for 1 year after all loans have been paid
Loan amortizations will be transferred to co-makers
When past due balances remain unpaid for more than 90 days, the co-makers shall
bear the outstanding liability including the interest and penalty charges therein.
When past due balances remain unpaid for more than 120 days, the Cooperative may
exercise the option to terminate the borrower’s membership and close the member’s
Share Capital Contribution against his/her outstanding balance.
Section 10. Pre-termination and Restructuring. Any loan can be pre-terminated or
restructured at any time subject to a surcharge of 3% of the outstanding loan balance.
Section 12. Procedure. The following procedures will be followed when availing of the
Cooperative’s loan products:

1. Member to secure a Loan Application Form either online or from the Coop
Admin.
2. Member to fill-up the form and submit the accomplished form to the Cooperative.
3. The Cooperative will check for completeness of the loan application as well as
the borrower’s compliance to the coop’s policies including, but not limited to,
Share Capital Contribution, tenure, and MIGS status, before endorsing the same
to the Credit Committee and/or Board of Directors.
4. All compliant loan applications may be approved by at least one member of the
Board.
5. All non-compliant loan applications will require special exception approval from
the majority of the Board of Directors.
6. The Coop releases the loan proceeds to the borrower’s bank account on record.
 REPUBLIC OF THE PHILIPPINES
PROVINCE O CAMARINES NORTE
MUNICIPALITY OF LABO
oOo
BARANGAY BAUTISTA ABRICULTURE COOPERATIVE
Purok 3, Barangay Bautista Labo, Camarines Norte
CDA Reg. No.9520-100500035297
This procedure can be completed in 1-2 weeks for most of the loans assuming borrower
is compliant with the Credit Policy (e.g. tenure, share capital, etc.). Longer processing
period will be needed for loan applications that are not within the Credit Policy as they
will require special exception approval from the Board of Directors.
Note: Where the Board has rejected the loan application, the Board is not obliged to
provide any reason for such rejection or to respond to any explanation with respect to
the decision. Members may, however, appeal for reconsideration within 10 working
days and provide additional information for Board consideration.

Prepared by:

Ma. Lourdes V. Rafer

Secretary
BBAC

Signed by:

_____________ __________________
Andy B. Rocas Camilo P. Relaga
BOD BOD

______________________ _______________________
Gerry Vic L. Villaluz Lope P. Villaluz
BOD BOD

_____________________
Isabe B. Valenzuela
Chairman of the Board