Funds for MSME loans during the pandemic fully utilized – DTI

The Small Business Corporation (SBCorp) said funds for lending to multi-sectoral micro, small, and medium enterprises (MSMEs) adversely affected by the COVID-19 pandemic have been fully utilized as of the end of 2021.

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SBCorp, the government’s micro financing arm under the Department of Trade and Industry, issued this statement following a report by the Commission on Audit (COA) stating that a total of P4.99 billion — or more than half of the funds for MSMEs allocated under the Bayanihan to Recover as One Act, or Bayanihan 2 —remained unused as of mid-2021.

SBCorp President and CEO Luna Cacanando explained, “Of the P7.93 billion loan funds granted by the Bayanihan 2 Act to SBCorp for MSMEs, P4 billion was set aside for travel and tourism related loans, and the rest or P3.93 billion were used for lending to multi-sectoral MSMEs or businesses in trading, manufacturing, services, agriculture and other sectors.”

As of February 28, SBCorp has approved a total of P5.9 billion to these multi-sectoral MSMEs, far exceeding the PHP3.93 billion in funds provided for types of enterprises, or by 150 percent. The SBCorp President added that the extra funding was internally sourced from SBCorp funds just to be able to continue the momentum of lending during the pandemic.

She stressed, “In fact, SBCorp has lent more to these MSMEs than what was provided for by the Bayanihan 2 Act and downloaded by DBM.”

The Bayanihan 2 Act instructed a capital infusion to the SBCorp of P10.0 billion as the government’s response to the need for financing assistance to MSMEs affected by the series of protracted lockdowns and Enhanced Community Quarantine (ECQ) since March 2020.

However, only PHP8.08 billion was released by the DBM to SBCorp which was downloaded in November 2020, out of which PHP7.93 billion were loan funds, the rest earmarked for mobilization and operating expenses.

The loan program for tourism enterprises or the CARES for TRAVEL is administered by the SB Corp in partnership with the Department of Tourism.

The excess funds were sourced by the SBCorp from the annual funds provided by Congress for the P3 Program, a micro-financing program intended by the government to replace usurious money lending. Also, with the concurrence of the DOT, a portion of the funds for the tourism sector was temporarily used for lending to multi-sectoral MSMEs, as the uptake of loans for tourism was very slow.

Cacanando added, “The travel and tourism sector has lagged behind the multi-sectoral MSMEs in availing of loan assistance from the government due to the effects of the prolonged lockdown in the tourism sector. The uptake of loans from tourism establishments has been very slow due to the series of lockdowns and the general uncertainty that had governed the sector the past two years.”

As of February 28, 2022, only P278 million worth of loans to the tourism sector have been approved by SBCorp, although as much as P524 million are now in the pipeline for processing.

“We expect an increase in loan applications from the Travel and Tourism sector as the country removed last March 1 the restrictions in most inter zonal domestic travel and the quarantine requirements for vaccinated international travellers. Also, the scope of the CARES for TRAVEL Program has been expanded to include non-DOT accredited tourism enterprises such as tourism support services and facilities. Lastly, the destruction brought about by Typhoon Odette in major tourism areas in the country has increased the demand for CARES for Tourism and Travel loans,” he said.

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