MSMEs in tourism get access to interest, collateral-free loans

The Department of Tourism (DOT) and the Small Business Corp. (SB Corp) have rolled out a loan assistance program for micro, small and medium enterprises (MSMEs) in the tourism industry.

The program under the COVID-19 Assistance to Restart Enterprises (CARES) of the SB Corp., an attached agency of the Department of Trade and Industry, gives tourism MSMEs access to zero interest, no-collateral loans with a loan term period of up to four years, including a corresponding grace period of up to one year.

Under the Bayanihan to Recover As One Act or Bayanihan 2, the tourism industry was allocated P6 billion for loans.

“We look forward to working with the SB Corp in providing our tourism enterprises with what they need - access to working capital loans,” Tourism Secretary Bernadette Puyat said.

She said the department believes that the program would accelerate the country’s tourism recovery from the harsh impacts of the pandemic.

“By working together, we can hopefully bring tourism, an industry that contributed 12.7 percent to the country’s 2019 GDP, back to its glory days,” she said.

Under the loan program, borrower MSMEs will only need to pay a one-time service fee, which is set at a maximum of eight percent for a four-year loan.

SB Corp will evaluate and process all loan applications of DOT-accredited MSMEs and local government unit (LGU)accredited small-scale tourism-oriented enterprises to ensure their eligibility and will determine the loanable amount and terms in accordance with the CARES for Tourism Rehabilitation and Vitalization of Enterprises and Livelihood (TRAVEL) program guidelines.

The DOT will regularly endorse to SB Corp a list of accredited tourism enterprises and LGU-accredited small-scale tourism-oriented enterprises that may be entitled to avail of business loans under the CARES for TRAVEL program, subject to further evaluation by SB Corp.

Meanwhile, the SB Corp will regularly submit loan implementation reports to the DOT subject to compliance with Republic Act 10173 or the Data Privacy Act of 2012.

“Aside from rescaling, rebooting and making some sort of whole industry pivot, we also recognize the need for tourism MSMEs to have access to financial assistance or funds just to tide them over the present pandemic crisis,” Puyat said.

The P6-billion credit facility is part of the P10.1 billion package for the tourism industry under Bayanihan 2, which also includes P1 billion for tourism road infrastructure to be implemented with DPWH; P100 million for DOT-accredited and LGU licensed tour guides; and P3 billion to be administered by the Department of Labor and Employment (DOLE) for cash-for-work program to help DOTaccredited enterprises and its displaced employees.

Puyat stressed earlier that the policy for the P3 billion program is not just a release of funds, but would be used as a cash-for-work or cash-for-training mode “because the intention of both departments is to ensure that apart from the cash, the stakeholders would receive something permanent in the process.”

The tourism sector, among the hardest hit by the COVID-19 pandemic, is a key driver of the Philippine economy.

Data from the DOT show that estimated inbound tourism revenues for the seven months of 2020 plunged 72 percent to P81 billion from P284 billion in the same period last year as travel restrictions remain in place amid the pandemic.

In addition, international visitor arrivals during the period dropped 73 percent to 1.3 million.