80% of SB Corp clients have problems with their loans due to COVID-19

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ABOUT 80% of Small Business Corp. (SB Corp.) borrowers have said that they cannot continue their loan agreements due to the coronavirus disease 2019 (COVID-19) pandemic, SB Corp. President and Chief Executive Officer Ma. Luna E. Cacanando said.

Ms. Cacanando was speaking during the virtual hearing of the House committee on trade and industry on Friday when she was asked by Nueva Ecija Rep. Rosanna V. Vergara how many of their clients are on the verge of bankruptcy due to the pandemic. “Only 20% of our existing borrowers have expressed that they can continue their loan agreements based on the amortization schedules existing for them. So 80% po actually may problema na (already have problems),” she replied.

“The way we address it now is to provide nga the moratorium during the ECQ (enhanced community quarantine), and then for the six months after the ECQ, interest rate lang po ang babayaran nila (they will only pay the interest rate),” she added.

SB Corp. has lent about P5.64 billion to 119,621 borrowers as of December 2019, according to Ms. Cacanando’s presentation to the panel.

Of this amount, P1.40 billion has been released for retail lending while P4.24 billion was released for wholesale lending. Meanwhile, P216 million was released to about 4,300 micro enterprises in the National Capital Region under the Pondo sa Pagbabago at Pag-asenso (P3) program.

Ms. Cacanando said that these existing borrowers can avail of the recently launched COVID-19 Assistance to Restart Enterprises (CARES) program, a P1-billion lending facility aimed to support micro-, small- and medium-enterprises (MSMEs) in addressing the economic impact of the pandemic.

Yun pong CARES program, kung saan mas mababa ang interest, eligible rin po yung existing borrowers natin (Through the CARES program, where the interest is low, our existing borrowers are eligible) to get additional loans so that they can also restart their businesses, Actually we are making it 1.5 billion because we still have excess funds under P3,” she said.

The loan is open to micro and small businesses which have been in at least a year of continuous operation by March 2020, and whose businesses “suffered drastic reduction” during the epidemic.

Loans can be used to recover losses such as updating loan amortizations for vehicles and other fixed asset loans, inventory replacement for damaged perishable stocks, and working capital replacement to restart the businesses.

Micro enterprises with an asset size of up to P3 million may borrow between P10,000 to P200,000, while small enterprises with assets not bigger than P10 million may borrow up to P500,000.

The interest rate is 0.5% per month, and payments will have a grace period until the end of the community quarantine.

Ms. Cacanando asked Congress’ assistance in implementing an “equitable distribution” of the CARES fund by taking into consideration the level of impact and the strategies developed by each local government unit (LGU) in the country.

“We’d like to propose to Congress, we also consider the socio-economic recovery plans per district and we use this to map out the utilization of whatever funds that will be given to us,” she said.

Ms. Cacanando said that this proposal can ensure that all distressed micro and small businesses in each LGU will be equally addressed. — Genshen L. Espedido