There is a need to secure more funds as the government's loan program for micro, small, and medium enterprises (MSMEs) is already oversubscribed, the Department of Trade and Industry (DTI) said Tuesday.
According to Trade Secretary Ramon Lopez, applications for the P1-billion COVID-19 Assistance to Restart Enterprises (CARES) program is already two times oversubscribed.
"Right now the application is over P2 billion. It's oversubscribed and that's the reason why it's important that we can have new funds under the stimulus package," he said in a virtual briefing.
Latest data available from the DTI showed that the Small Business (SB) Corp. has approved a total of P100 million-worth of loans under 1,175 accounts.
Out of the approved amount, the DTI said only P5 million has been released to a total of 55 accounts, while the remaining P95 million is still awaiting the signature of the 1,120 borrower accounts.
The same data showed that out of the 22,932 accounts that applied for loans under the CARES program, a total of 1,638 have already been denied, usually due to less than one-year business track record per loan application document.
SB Corp. in May started accepting loan applications for the CARES Program, under which the government has allotted P1 billion that may be loaned by MSMEs operating for at least a year prior to March 16, 2020.
Micro enterprises with asset size of not more than P3 million are allowed to borrow from P10,000 to P200,000, while small enterprises with asset size of not more than P15 million may borrow up to P500,000.
"We expect P500 million to be released by the middle of July but after that, we really have to use other peoples' money. In other words, other funds," Lopez said.
Lopez said that once the P1 billion is fully exhausted, SB Corp. will act as a loan originator with the Land Bank of the Philippines and the Development Bank of the Philippines.
"It is essential that we 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 said.
"We must therefore bring back business confidence and revive consumer confidence for the economy to go on again," added Lopez.
In May, Lopez said over 525,000 or 52.66% of MSMEs in the country had to stop operations due to the lockdowns imposed to prevent the spread of the virus.
Just 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. —LDF, GMA News