A BILL has been filed in the Senate proposing to expand government financial institutions’ (GFIs) capacity to grant loans to enterprises hit by the pandemic.

Senate Bill No. 1646, also known as the “GFIs Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE)” bill, will cover the Philippine Guarantee Corporation (PGC), Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LANDBANK).

The GFIs “must expand their credit programs to assist affected MSMEs (micro, small and medium-sized enterprises) and strategically important industries in meeting their liquidity needs,” Senator Maria Imelda Josefa R. Marcos, who chairs the economic affairs committee, said in the bill’s explanatory note.

The bill authorizes the PGC to increase the maximum loan guarantee coverage per borrower to benefit MSMEs as well as ease its rules and regulations. The PGC was also tasked to prioritize businesses and MSMEs severely affected by the crisis.

It also creates a PGC trust fund, worth P20 billion.

The Luzon-wide lockdown starting mid-March, which was intended to contain the spread of coronavirus disease 2019 (COVID-19), led to the shutdown of businesses and suspension of transportation.

“Enterprises, MSMEs or large enterprises, were heavily impacted by the disruption in travel and transport of goods and services because of the COVID-19 outbreak,’ Ms. Marcos also said.

The DBP will be tasked to provide an interest-free loan program to MSMEs, particularly those in the services, manufacturing and infrastructure. This will be payable within 3-5 years.

The DBP may also rediscount loans and other credit accommodations to such enterprises, granted by the Small Business Corp. and financial institutions supervised by the central bank. This also covers credit programs offered by the Department of Agriculture-Agricultural Credit Policy Council (DA-ACPC).

LANDBANK will also introduce interest-free loans under the bill, payable within 3-5 years, and rediscount loans to MSMEs.

The bill also appropriates P15 billion and P35 billion to the DBP and LANDBANK trusts, respectively, bringing total funding to P70 billion.

The measure incentivizes the DBP and the LANDBANK via exemptions from the documentary stamp tax and capital gains tax, among other taxes imposed in implementing the loan assistance program and rediscounting.

The GFIs will also be entitled to fee privileges, such as 50% of the filing fees for any foreclosure and 50% of the land registration fees, in lieu of other applicable fees.

The measure is among the bills being pushed to assist financial institutions during the pandemic. Its counterpart measure, House Bill No. 6795, has so far obtained committee approval.

The House version also creates a special holding company that will rehabilitate affected companies. It will also need P55 billion worth of funding.

Congress has so far sought to provide a P39.4-billion capital infusion to GFIs, under the Bayanihan to Recover as One bill. Of this, P5 billion will go to credit guarantee programs; and P18.4 billion and P6 billion to the LANDBANK and DBP, respectively, for low-interest loans.

Some P24 billion will be provided as direct cash or loan interest rate subsidies for programs under the DA-ACPC. — Charmaine A. Tadalan