DTI’s MSMEs Loan Program Is Already Oversubscribed, More Funds Needed
The Department of Trade and Industry (DTI) has announced on Tuesday that they need to secure more funds for the government’s loan programs for micro, small, and medium enterprises (SMEs) as it is already oversubscribed.
Trade Secretary Ramon Lopez disclosed in a virtual briefing that the ₱1 billion COVID-19 Assistance to Restart Enterprises (CARES) program is already oversubscribed by two times, with applications already amounting to over ₱2 billion.
The latest data from the DTI shows that the Small Business (SB) Corp. has approved a total of ₱100 million-worth of loans under 1,175 accounts. A total of ₱5 million has been released to at least 55 accounts and the ₱95 million is currently awaiting to be released to 1120 and is currently waiting for the borrowers’ signatures.
DTI’s data also showed that a total of 1,638 applications have been denied out of the 22,932 who applied for the CARES loan program. The most common reason for the rejection was due to the business tenure of less than one year as of application.
The SB Corp launched its CARES Program in May, which was allotted with ₱ 1 billion by the government and can be loaned by MSMEs.
Which businesses are allowed to apply to this said program?
- A business that has operated for a least a year prior to the lockdown or March 16, 2020.
- Micro enterprises with asset size of not more than ₱3 million can borrow around ₱10,000 to ₱200,000.
- Small enterprises with asset size of not more than ₱15 million may borrow up to ₱500,000.
The DTI Secretary expects ₱500 million to be released by mid-July, and once that’s exhausted DTI will have to find other sources of funds. Secretary Lopez added that SB Corp. will act as a loan originator with the Land Bank of the Philippines and the Development Bank of the Philippines once the ₱1 billion is fully exhausted.
The Secretary expressed that it is essential to support the economy by keeping jobs so that people will have the income, income that will bring back demand and demand that will entice companies to produce more supply. He then emphasized that they must, therefore, bring back business confidence and revive consumer confidence for the economy to go on again.
According to the DTI, over 525,000 or 52.26% of MSMEs in the country ceased operations due to the lockdown. And last week, Presidential spokesperson Harry Roque, Jr. said the Philippines has already secured at least $5.758 billion in loans to support government efforts against the impacts of the coronavirus.