PCCI head urges SB Corp. to lend directly to micro, small enterprises
Amb. Benedicto Yujuico, president of the Philippine Chamber of Commerce and Industry (PCCI), has called on SB Corporation to directly lend to micro, small and medium enterprises rather than tie up with intermediaries which only make supposedly very affordable government loans more expensive
Yujuico in a recent Foreign Correspondents Association of the Philippines webinar noted that while it is not bad to go through the banks or micro financing institutions to avail of the SB Corp. financing, loans just end up more expensive because of the intermediary cost.
“It is not bad to go through the banks but intermediary banks’ interest is 18 percent,” said Yujuico adding nobody can afford the 18 percent interest rate.
The businessman also noted that 130,000 MSME loans were granted by SB Corp of which 100,000 were done via intermediary banks. “I hope SB Corp. can lend more directly instead of going to the banks,” he said.
SB Corp. grants 0.5 percent monthly interest rate or 6 percent annually for loans to micro and small enterprises from ₱10,000 to as much as ₱500,000 payable over 2 years, but if the loans are course through MFIs or banks the interest would skyrocket to 18 percent annually. The government lending arm has ₱1-billion kitty for its CARES Program to ensure micro and small enterprises recover from the COVID-19 crisis.
In addition, he said, going through financial institution would add more red tape and longer processing period.
Marikina Representative Stella Quimbo also noted that the 130,000 MSMEs served by SB Corp. are the ones formally registered only meaning these are the businesses with Social Security System.
“But there is a bigger informal sector of 4.5 million so there are way more informal businesses that need help because we cannot afford to give the Social Amelioration Program forever. So, we have to help the informal sector get back on their feet by putting gin credit medication for SB Corp.,” she said. Thus, the PESA bill proposed by Quimbo and Bicol Cong. Joey Sarte-Salceda provides for the grant of “no interest loan” for affected MSME enterprises. (Bernie Cahiles-Magkilat)