Banks asked to extend loans to MSMEs, farmers

SPEAKER Alan Peter Cayetano has urged the government and private banks to provide loans to millions of small and medium-scale enterprises (MSMEs) and farmers suffering from the coronavirus disease (COVID)-19 pandemic.

“The purpose is to help people but at the same time keep the financial institutions healthy,” Cayetano told Tuesday’s Defeat COVID-19 Committee (DCC) technical working group (TWG) meeting of the economic stimulus package cluster that House Majority Leader and Leyte Rep. Martin Romualdez, co-chair of the special COVID-19 panel, presided via Zoom.

Cayetano said the financial system’s problem is how to get potential small borrowers avail themselves of loans from the banking sector.

“How do we get people not to borrow from 5/6 lenders who charge very high interest rates and go to you?” Cayetano asked resources persons of the committee.

The resource persons included Finance Sec. Carlos “Sonny” Dominguez III, Bangkok Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno, Land Bank of the Philippines (LandBank) President Cecilia Borromeo, and Government Service Insurance System (GSIS) General Manager Rolando Macasaet.

Cayetano said small borrowers “are intimidated by the formal banking system.” “Even farmers with land titles who apply for small loans are told the application/approval process is very tedious. They are being dissuaded,” he said.

He suggested to Dominguez, Diokno, Borromeo, and Macasaet to simplify and shorten such process, and to reduce documentary requirements.

“But of course without affecting your financial institutions. We do understand that,” he told them.

In response, Borromeo, whose primary mandate is to lend to farmers, market vendors and other small borrowers, said, “Yes, we can strike a good balance of maintaining prudence and the other due diligence processes that we need to undertake before we lend out precious government funds.”

“We did it in the case of the P15,000-loan to farmers, We trimmed down the requirements and shortened the process. One key success factor was that we had a list of beneficiaries identified by Department of Agriculture. So we can do it in the case of small and medium-scale enterprises. We will continue to look for solutions,” said Borromeo.

Diokno said the BSP has eased the requirement for banks to set aside a portion of their funds as reserves.

“We have freed up from P180 billion to P200 billion and we asked banks to lend the money to MSMEs,” said Diokno.

Dominguez said the government, through the Philippine Export and Foreign Loan Guarantee Corp., would guarantee a large portion of the loans banks extend to MSMEs to boost lending to small borrowers.

For his part, Macasaet said GSIS is offering loans of up to P500,000 to its members payable over six years at an annual interest rate of six percent

“We have already released over P100 billion to 250,000 members,” he said.

AAMBIS-OWA party-list Rep. Sharon Garin, a co-chair of DCC’s economic stimulus cluster, renewed her call for the immediate passage of the fiscal stimulus package that will help Filipino businesses recuperate from the devastating effects of the COVID-19 pandemic.

During her presentation to the DCC, Garin underscored the importance of boosting business confidence and maintaining the stability of the country’s labor force beyond the lifting of the enhanced community quarantine (ECQ) in Luzon. “During ECQ, we need to safeguard Filipino lives.

But after ECQ, we need to safeguard their livelihood. The lifeblood of the economy is employment. Without jobs, Filipinos will not have income, won’t have food on their tables, and won’t be healthy members of our society,” the subcommittee co-chair opined.

Garin, the chairperson of the House committee on economic affairs, also revealed that around one million businesses, of which 30 million families are dependent on, need government support.

She maintained that business owners and Filipino employees, whether white or blue-collar, in Metro Manila or the province, salary or daily wage-earners, need government intervention to help them out in this predicament.

Garin further warned that the economic distress brought about by the pandemic will continue to worsen should the ECQ be extended.

She reiterated that the mandate of Republic Act (RA) No. 11469, otherwise known as the Bayanihan to Heal As One Act, is only limited to three months and that an economic stimulus package is crucial in ensuring that Filipinos are secure in their livelihood after ECQ.

“Nobody should lose their job or business because of COVID-19. After we save the lives of Filipinos, we must save our economy from recession,” said Garin.

The subcommittee aims to finalize the consolidation of the economic stimulus bills before Congress resumes session on May 4, 2020.

Garin said she remains optimistic that the bills geared toward the protection of jobs and augmentation of business liquidity will soon jumpstart the country’s economic recovery.