THE PHILIPPINE economy has taken a huge fall since the imposition of the enhanced community quarantine last March 17, 2020. Over 2,000 businesses, mostly micro, small and medium enterprises (MSMEs), were forced to shut down and approximately 7.52 million jobs have been lost. Despite the relaxation of quarantine restrictions allowing most industries to resume partial operations, a lot of small businesses are still reeling from the effects of the community quarantine.
Recognizing that the plight of MSMEs directly impacts majority of Filipinos, the Philippine Government created financing programs designed to mitigate the impact of the COVID-19 pandemic on these small businesses.
Among the earlier government funding programs created for small businesses are the Department of Finance’s Small Business Wage Subsidy Program (SBWS) and Small Business Corporation’s COVID-19 Assistance to Restart Enterprises (CARES). Applications for SBWS ended last May 8, 2020, while the budget provided under the CARES program has been fully utilized.
Here are other funding sources that businesses may consider as they recover from the impact of the pandemic.
PHILGUARANTEE’s Credit Guarantee Program
PHILGUARANTEE’S Credit Guarantee Program allows MSMEs to take out loans from their chosen accredited banks and financial institutions. The program provides for an equal credit risk sharing arrangement wherein the agency guarantees lending banks against the losses they will incur in lending to MSMEs. This means that the agency will guarantee 50 percent of the principal amount of the loan. A maximum of P50 million can be extended to each MSME that has been affected by the pandemic, with a term of up to five years. As of July 22, 2020, PHILGUARANTEE has approved approximately P37 billion MSME Credit Guarantee.
DBP’s Rehabilitation Support Program on Severe Events (RESPONSE)
If you have been in operation for at least 1 year, DBP’s RESPONSE offers financing for up to 95 percent of the business’ minimum cash requirement. To avail, borrowers may go to the nearest DBP Lending Center to submit the necessary requirements and should propose an eligible project that has high community or regional developmental impact on the affected communities that they serve.
Private institutions, including corporations, cooperatives, associations, schools, hospitals and financial institutions, are eligible borrowers. LGUs and government corporations, such as water districts, as well as state universities and colleges, can also avail of the program.
Under the program, a longer repayment period of up to 15 years, inclusive of a three-year grace period, is granted to certain public institutions and up to 10 years with a three-year grace period for private institutions.
LBP’s Interim REhabilitation Support to Cushion Unfavorably-affected Enterprises by COVID-19 (I-RESCUE)
Through the I-RESCUE Lending Program, the Land Bank of the Philippines is providing assistance through credit and and loan restructuring under more flexible terms and conditions.
SMEs, Microfinance Institutions (MFIs) and Cooperatives may borrow up to 85 percent for working capital, at an interest rate of five percent per annum, payable up to a maximum of five years, with grace period on the principal payment. I-RESCUE likewise offers restructuring of existing loan account via additional loan, extended repayment period, or through other means or combination of means). The loan may be extended up to a maximum of 10 years, with up to three years grace period on principal and up to one year grace period on interest, depending on cash flow.
During these challenging times, various government agencies have extended measures to assist small businesses. As we recognize the losses that we have suffered during the quarantine restrictions and as we shift to the new normal, it is crucial to identify which programs we can utilize and avail to withstand and recover from the effects of this pandemic./PN
