State-owned Development Bank of the Philippines (DBP) has rolled out a special lending program that seeks to accelerate the recovery of micro, small and medium enterprises (MSME) amidst an economic slowdown caused largely by the ongoing pandemic, a top official said.
DBP President and Chief Executive Officer Emmanuel G. Herbosa said that the DBP RESPONSE to accelerate MSME Recovery (DBP RESPONSE – MSME RECOVERY) is a sub-program of the DBP RESPONSE program aimed at providing rehabilitation financing support to both public and private institutions that have been adversely affected by calamities.
“The DBP RESPONSE – MSME RECOVERY program is DBP’s tangible action to the urgent need to assist our MSMEs and to encourage them to resume operations, thereby boosting the government’s recovery efforts,” Herbosa said.
DBP is the seventh largest bank in the country in terms of assets and provides credit support to four strategic sectors of the economy – infrastructure and logistics; micro, small and medium enterprises; environment; social services and community development.
The MSME sector is an essential component of the Philippine economy, accounting for approximately 99.6 percent of total enterprises and employing about 62 percent of the country’s workforce based on government data.
The new loan program offers low interest and flexible terms to finance MSMEs’ operating expenses and is an integral part of the bank’s compliance to Republic Act No. 11494 or the “Bayanihan to Recover as One Act.”
Herbosa said that eligible borrowers include duly registered medium enterprises, including start-ups and cooperatives, that may be current or new clients of DBP engaged in agri-fishery and non-essential businesses.
He said the program also covers wholesale lending to institutions such as rural banks, thrift banks, microfinance-oriented banks, and non-bank financial institutions including cooperatives and microfinance institutions, for relending to MSME borrowers.
“Current DBP borrowers including those who have availments under DBP RESPONSE may still avail of funding support under this new program for their operational expense requirements,” Herbosa said.
DBP Executive Vice President for Development Lending Jose Gabino D. Dimayuga said the new credit facility has no collateral requirement for loans amounting to P3-million and below.
He said that qualified borrowers can borrow up to 100% of their one-year cash operating expense based on their 2019 audited financial statements or 2020 interim financial statements.
“As a government financial institution, we understand that the MSME sector may likely take time to fully recover and this credit facility offers a maximum grace period of up to twelve months on the principal, and a maximum of three years loan tenor including grace period,” Dimayuga said.