THE government has put in place a P120-billion guarantee program to cover bank loans of small and medium enterprises (SMEs) and is eyeing a loan assistance facility that will support private schools that offer a study-now-pay-later scheme.
The twin moves are in response to the impact of the coronavirus disease 2019 (COVID-19) pandemic.
“We have two programs that we are working on, one is already in place. PhilGuarantee is ready to guarantee up to P120 billion worth of loans that banks give to SMEs. That guarantee program is ready. SME goes to a bank, borrows the money, the bank goes to Philguarantee and we will provide guarantee of the loan,” said Carlos Dominguez, Department of Finance secretary.
In a virtual meeting of the Defeat COVID-19 Sub-committee on Economic Stimulus Package technical working group yesterday, Dominguez said the guarantee is up to 50 percent at present.
“But we are considering increasing the value of that guarantee. So the total loans that will be available to be guaranteed is P120 billion,” Dominguez said.
The second program which is geared towards private schools was discussed with the Land Bank of the Philippines, Dominguez said.
”If private schools provide a study-now-pay-later program and get a promissory note from the student to the private school, Landbank can lend the private school against that promissory note, probably up to 70 or 75 percent of the value of the promissory note,” Dominguez said.
“That is a program that we’re looking at and … we could probably go up to a P1 billion very easily with that facility. But they are studying it. This is aimed for the people, especially the overseas Filipino workers who are coming back, and decide to upgrade their skills and go back to school,” he added.
Dominguez said the program covers both high school and college.
Asked about the interest rate and mode of payment, he said: ”We will negotiate that with the private school but essentially since the central bank has provided a lot of liquidity and has lowered the base interest. These interest rates will be very affordable.”