DOF BARES P120-B SMALL BIZ CREDIT GUARANTEE
THE government is looking to implement a P120-billion credit guarantee program for affected small businesses as well as an enhanced net operating loss carryover of five years to help businesses cope with losses from the Covid-19 pandemic—moves that will cost the state around P140 billion.
At the same time, the Department of Finance (DOF) said it will be implementing a P51-billion wage subsidy program for some 3.4 million employees in small businesses affected by the Luzon-wide lockdown.
Finance Secretary Carlos G. Dominguez III told lawmakers in a virtual presentation to the House Economic Stimulus Response Package Cluster on Tuesday these efforts will be part of the P583.8 billion worth of emergency support for vulnerable groups to cushion the socioeconomic impact of the pandemic.
“This [small business wage subsidy] will complement the Social Amelioration Program in the Bayanihan Law by providing support to the formal sector employees who comprised the middle class,” Dominguez said.
“These efforts will be complemented by other relief programs for small businesses such as credit guarantee for small business loans and an enhanced net operating loss carryover for five years,” he added.
To date, Dominguez also said the fourpillar socioeconomic strategy of the Duterte administration against Covid-19 now has a combined value of P1.45 trillion or 7.8 percent of the country’s GDP.
Under the DOF’S Small Business Wage Subsidy Program, each beneficiary will receive a subsidy with a range from P5,000 to P8,000 depending on the regional minimum wage.
The subsidy will be for two months and will cost a total of P50.8 billion. Of the total, the DOF said in its presentation that P38.1 billion will go to some 2.6 million workers whose employers are compliant with the Bureau of Internal Revenue (BIR) and Social Security System (SSS) regulations, while P12.5 billion will go to some 0.8 million workers whose employers are “less compliant.”
Small businesses are defined as those who did not belong to the list of the BIR’S Large Taxpayer Service. Workers who belong to the low- to medium-middle class are employed in some 1.6 million small businesses in the formal sector affected by the lockdown. The online system for business owners to submit their list of employees via SSS website is currently being pilot-tested and is scheduled to go live this week.
The DOF said the wage subsidy distribution will be better targeted because those who are registered with SSS and BIR are easily identifiable and eligibility under the program is determined quickly.
Incentivize compliance
FINANCE Undersecretary Karl Kendrick Chua said during a televised meeting presided by President Duterte late Monday night that the program also aims to incentivize better compliance in registering with the BIR and SSS “because these workers are the ones who would be first covered by the subsidy.”
Despite this, the DOF still vowed to also support under the program the 800,000 workers whose employers are not fully compliant with SSS or BIR as the government understands that the noncompliance may have been caused by inadvertent mistakes on the employer’s part.
To avoid duplication, the DOF said the beneficiaries who already got their P5,000 from the Department of Labor and Employment’s Covid-19 Adjustment Measures Program will only be given one month of wage subsidy under the Small Business Wage Subsidy Program.