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MORE SUBSIDIES NOT LOAN FOR MSMES – QUIMBO

A lawmaker urged economic managers to seriously consider expanding the various subsidy programs for micro, small, and medium enterprises (MSMEs) to help them recover from the impact of the coronavirus pandemic.

Marikina City Representative Stella Quimbo said programs such as the Department of Trade and Industry’s Livelihood Seeding Program – Negosyo Serbisyo Sa Barangay (LSP-NSB) could help get small businesses restarted, and for them to eventually muster “enough confidence” to avail of the expanded loan programs.

“Subsidies are especially important today, with the series of oil price hikes.”

“Subsidies are especially important today, with the series of oil price hikes,” Quimbo said.

The legislator pointed out the risk aversion of MSMEs to loans, as the percentage of MSME loans to total loans in 2020 and the first semester of 2021 were both 7.6 percent, which is lower than pre-pandemic rates of 8.8 percent in 2019, according to Bangko Sentral ng Pilipinas data.

The lady lawmaker cited the Commission on Audit (COA) report dated March 2, 2022 stating that a total of P4.99 billion or more than half of the allotted loans for MSMEs under the COVID-19 Assistance to Restart Enterprises (CARES) program, was unused as of the end of June 2021.

The CARES Program is one of the lending programs designed for pandemic response, and to be implemented by the Small Business Corporation (SBC), which received P9.08 billion to be distributed as collateral-free, zero-interest loans to MSMEs under the Bayanihan to Recover as One Act (Bayanihan 2).

“At the get go, I was concerned that the loan programs for MSMEs were going to fail because to begin with, many MSMEs are unbanked. Many belong to the informal sector. About 77 percent of Filipinos are unbanked,” she said.

“From September 2020 to June 2021, only 48,010 MSMEs out of a potential 995,745 potential clients applied for loans.”

Quimbo cited the COA report, saying from September 2020 to June 2021, only 48,010 MSMEs out of a potential 995,745 potential clients applied for loans.

She suggested that government financial institutions should further streamline the loan requirements and provide more effective credit mediation services.

“Kailangan ng small businesses ang ‘hand holding’ sa ngayon, para lumakas ang loob na umutang (Small businesses need ‘hand holding’ right now so that they would be encouraged to avail of loans),” Quimbo said.

In its March 2 report, state auditors noted that the reasons why more than half of the allocated funds were unused were due to the “insufficiency” in SB Corp.’s human resources and the “hesitancy of potential clients” to borrow from the facility.

SB Corp., however, said the remaining amount was only P2.03 billion as of January 2022.

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