The micro-, small and medium enterprise (MSME) industry is showing signs of life, with some businesses growing and thriving even during the community quarantines amid the health crisis, the Banko Sentral ng Pilipinas (BSP) said on Saturday, November 21.
“Mas marami ang bumibili ng itlog noong nagkaroon ng ECQ (enhanced community quarantine) dahil affordable ang presyo nito sa mga tao,” shared Evangeline Revilla, a Marinduque-based egg supplier.
In June 2020, Revilla took out a loan from a local microfinance bank which she used as additional capital to further expand her business.
The egg seller was among the 14 respondents in a short survey conducted by the BSP. The survey revealed that 85 percent of the respondents are in the process of taking out a loan from a Southern Luzon-based microfinance bank. Nine of the business owners, comprising 75 percent of the survey respondents, said they filed a loan to expand their business.
Survey respondent Maria Fe Sagana, who engages in the wholesale and retail of grocery items, also expressed hope that her loan proceeds would help her expand her livelihood. The Laguna-based businesswoman said the money would allow her to build additional rooms inside her resort and construct a party venue that she and her family could rent out.
“Malakas ang negosyo noong hindi pa nagkakaroon ng ECQ dahil marami ang pumupunta sa resort,” she shared, adding that a lot of people also bought from their sari-sari store.
Their resort is now open to the public after closing down during the ECQ.
The remaining three business owners said they would borrow from the bank to recover their losses.
Relief measures for the MSMEs
Apart from the measures that are meant to ensure liquidity in the financial system, the BSP had introduced a package of regulatory relief and incentive measures to sustain bank lending to MSMEs.
Intending to stimulate lending, the grant, renewal or restructuring of loans to MSMEs form part of the alternative compliance with the reserve requirements beginning April 24, 2020, until December 29, 2022.
To support financial consumers and help buoy the economy from the impact of the pandemic, the BSP has issued a cumulative policy rate cut of 175 basis points since February 2020 to bring borrowing costs to record lows and boost lending. These rates are the lowest on record since the BSP shifted to an interest rate corridor in 2016.
The credit risk weight of MSME loans that are current in status was also reduced to 50 from 75 percent until end-December 2021.
Meanwhile, loans that are guaranteed by the Philippine Guarantee Corporation, the Agricultural Guarantee Fund Pool (AGFP), and the Agricultural Credit Policy Council (ACPC) were assigned a zero percent credit risk weight. This move is meant to encourage banks to lend to small farmers and fisherfolk.
As a result of these measures, the top 30 banks granted loans amounting to Php 40.6 billion during the initial ECQ months of March and April 2020. Around Php 25.6 billion in MSME loans were also renewed while the top 30 banks restructured P1.8 billion during the same period.
As of the reserve week ending October 29, an average of Php 126.4 billion in MSME loans was used as compliance with the BSP’s reserve requirements, a substantial increase from the Php 8.7 billion in MSME loans reported in April 2020.