THE National Development Co. (NDC) may be tapped to rescue or bail out vital businesses which have been severely affected by the new coronavirus disease 2019 (COVID-19) pandemic.
But other firms may tap an interest-free loan.
The Philippine Exporters Confederation Inc. (Philexport) quoted House Committee on Trade and Industry chair Rep. Weslie Gatchalian as saying the P1.3-trillion fund under Philippine Economic Stimulus Act of 2020 (PESA) prioritizes granting interest-free loans by the Small Business Corp. (SB Corp.) for micro, small and medium enterprises (MSMEs) with a provision of a “loan Forgiveness” program.
While the exact amount is not yet final, Gatchalian said it has been proposed that the SB Corp. get a budget of P75 billion to expand its loan programs for MSMEs or enterprises which are out-of-reach of the formal banking industry.
“The loan forgiveness program means that the SB Corp. may waive a maximum of 15 percent of the loan provided that the borrowers pay all their installments on time and according to the payment schedule agreed upon,” he said in a webinar.
Gatchalian said an amount of P50 billion for 2020 and another P50 billion for 2021 are also proposed to be appropriated in favor of the Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP).
“This amount will be used to provide a loan program for non-essential businesses to assist and encourage them to continue investing in their businesses,” he added.
Examples of the business entities that will be included in this program are furniture, semiconductors, and electronics parts industry, business process outsourcing companies that outsource architectural and engineering services, software designers, freelancers and the self-employed who all export their services abroad.
Gatchalian further said the PESA bill will also allow the National Development Co. (NDC) to bail out vital businesses which have been severely affected by COVID-19.
“(The NDC) will be authorized to identify what critically-impacted businesses are. They may extend loans and other forms of financial accommodation and shall be authorized to make equity investments as the capital allocation firm of the government,” he said. “Allowing these businesses to go bankrupt and later on close will translate to more job losses.”
Gatchalian said these programs will be granted to MSMEs under the condition that the entitled firms must retain at least 75 percent of their total employees for a period of one year.
The MSME sector, comprising about 99 percent of all industries in the country, has been identified among the three hardest hit sectors of the Covid-19 pandemic, aside from tourism and transportation.
Gatchalian is optimistic the House will approve on second and third readings the PESA bill early this week so it can be transmitted to the Senate before the end of the week.
