The P1-billion loan program for struggling micro and small enterprises is expected to run out this month due to brisk demand, prompting the Department of Trade and Industry (DTI) to seek another P3.5 billion from a different fund.
DTI-attached agency Small Business (SB) Corp. has only allotted P1 billion for its COVID-19 Assistance to Restart Enterprises (CARES) Program, but the loan applications it received will require more than twice the amount.
Trade Secretary Ramon Lopez said on Thursday that SB Corp. has so far received 22,932 applications, which in total need over P2 billion worth of loans.
Out of these applications, only around 5 percent or 1,176 requests have been approved. Another 1,153 applications have been recommended for approval.
“The target is to use up this P1 billion by end of July. But since many applied, we’re hoping for an additional budget that would come from the stimulus packages being proposed in Congress,” he said during a Laging Handa briefing.
When asked for more information, Lopez said in a Viber message that more funds would be sourced from its existing Pondo sa Pagbabago at Pag-asenso (P3) program.
Launched in 2017, the P3 program was meant to give micro enterprises easier access to finance, while providing them an alternative to informal creditors that charge high rates.
“For the extra fund needed, we will use our other P3 portfolio fund, [which is] about P3.5 billion,” he told reporters.
Under the CARES program, micro and small enterprises operating for at least a year prior to March 16 and with an asset size not exceeding P15 million can tap the program.
Micro enterprises with asset size of not more than P3 million may borrow from P10,000 to P200,000 while small enterprises with asset size of not more than P15 million may borrow as much as P500,000.
Micro and small enterprises can use the loans for the following purposes: updating loan amortizations for vehicle loans or other fixed asset loans of the business; inventory replacement for perishable stocks damaged; and working capital replacement to restart the business.
The DTI said that the interest rate will be pegged at 0.5 percent per month with a grace period of six months on principal payments.