Micro, small and medium enterprises (MSMEs) will be offered zero-interest loans under the Philippine Economic Stimulus Act (PESA) bill, government officials said.
“If we’re able to get zero-cost funding, that’s the fund that we can lend at zero percent also. And then out of that funding, we will just ask for administration fee. So that’s we can pass on, the zero-interest rate. That’s the beauty of the economic stimulus package,” Department of Trade and Industry (DTI) Secretary Ramon Lopez said.
“Congress is allocating P80 billion that would be channeled through DTI’s financing arm, Small Business Corp., to MSMEs.”
Lopez earlier said Congress is allocating P80 billion that will be channeled through the DTI’s financing arm – the Small Business (SB) Corp.- to MSMEs.
While waiting for the stimulus measures to be passed in Congress, the SB Corp. has opened a loan application for MSMEs under DTI’s COVID-19 Assistance to Restart Enterprises (CARES) program, Lopez said.
During the online business forum of Foreign Correspondents Association of the Philippines (FOCAP) recently, Marikina City 2nd District Rep. Stella Luz Quimbo said the interest-free loan under the PESA bill will be coursed through SB Corp. as it has a wide reach to MSMEs.
Quimbo, who is also the co-author of the PESA bill, said even if SB Corp. partners with conduits to roll out the loan, the zero-interest-rate term of the loan will remain.
“Borrowers will only pay administration fees but the interest rate shall remain at zero.”
The legislator also echoed Lopez’s statement that borrowers will only pay administration fees but the interest rate will remain at zero.
In the same online forum, Philippine Chamber of Commerce and Industry (PCCI) President Benedicto Yujuico said intermediary banks put up to 18 percent interest on loans, which MSMEs cannot afford during the ongoing health crisis.
Quimbo added that a large number of small businesses in the informal sector, should be given assistance by the government.
“And my estimate, it’s about 4.5 million. So, there are way more informal small businesses. We need to help them. We can’t do social amelioration forever. We can’t afford that,” she said.
Quimbo said this is the reason why the PESA bill allotted a big budget for credit mediation and for the SB Corp. to help both registered and unregistered businesses.
“Many of the informal businesses will not go to the banks, they are afraid to go to the banks. We need to have an agency with specialized know-how like SB Corp. They know how to deal with the informal sector more than anyone else. So they should be the one to have the resources precisely to reach out to our unbanked small businesses,” she said.