STATE-owned Landbank of the Philippines reported loans extended to micro, small and medium enterprises (MSMEs) has hit P20 billion, a year after offering credit to affected small businesses.
LandBank said it has approved loans amounting to P20.07 billion as of end-April this year to borrowers adversely affected by government measures to contain Covid-19. The borrowers are composed mostly of MSMEs and co-operatives.
The bank offered these loans under its “Interim Rehabilitation Support to Cushion Unfavorably affected Enterprises by Covid-19” lending program, the initiative created in April last year to provide credit and loan restructuring assistance to businesses under more flexible terms and conditions.
As such, Landbank announced that it has doubled the program fund of the lending program to P20 billion from P10 billion to accommodate the increasing number of loan applications.
Broken down, the credit program has reached a total of 434 borrowers comprising 292 MSMEs, 81 cooperatives, 56 large corporations and five microfinance institutions (MFIs). Of the total P20.07 billion approved loans, P18.21 billion has already been released. Under the lending program, the LandBank said MSMEs, cooperatives, MFIs and large companies may borrow up to 85 percent of their emergency or permanent working capital requirement.
Terms are set at an affordable interest rate of 5 percent per annum for three years, subject to annual repricing thereafter, and payable up to 10 years with a maximum of two years grace period on the principal repayment.
LandBank said existing clients may also avail of loan restructuring under the Program via additional loan and extended repayment period to rehabilitate and restore their operational cash flow.
The program will be available until end-December 2022.
In 2020, a study from the Asian Development Bank (ADB) showed that MSMEs in the Philippines received the least volume of bank loans compared to their counterparts in peer nations before the pandemic.
The study titled “Asia Small And Medium Sized Enterprise Monitor 2020” reported that Philippine banks only lent $11.6 billion to MSMEs in 2019. This is the smallest MSME bank loan total in 2019 among the Association of SouthEast Asian Nations-5. The Asean-5 comprises Indonesia, Thailand, Malaysia, Philippines and Singapore.