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SBCorp relaxes terms on tourism loans due to poor availment

THE languishing tourism industry has been given a much-needed shot in the arm, with the relaxation of government’s terms under a lending program funded by the Bayanihan 2 Law.

In a letter to Tourism Congress of the Philippines (TCP) President Jose C. Clemente III dated May 26, 2021, Ma. Luna E. Cacanando, president and CEO of the Small Business Corp. (SBCorp) said the financial institution has extended the grace period on loans under its CARES for Travel Program, increased loanable amounts, allowed existing borrowers to borrow larger amounts, and widened the number of micro-, small-, and medium scale tourism enterprises (MSMEs) that can avail of funds.

“It is our hope that the above loan policy adjustments more adequately capture the requirements of MSMEs in the tourism industry as represented by the [TCP], and at the same time, provides the necessary balance for ensuring the success of the CARES for Travel Program from the point of view of credit risk mitigation,” said Cacanando.

As of June 7, 2021, SBCorp has approved 426 loan applications amounting to P183.2 million only. Of these, 348 MSMEs have already received their loans amounting to P139.4 million. Under the Bayanihan 2 Law, which was created to mitigate the impact of Covid-19 on individuals and businesses, P6 billion in funds were allocated to tourism for direct lending. SBCorp is the MSME lending unit of the Department of Trade and Industry (DTI).

It was earlier reported that tourism stakeholders feared they would be unable to pay their loans if the grace period was short, and that the low approved loan amounts were discouraging.

No more funds if no borrowers

Clemente, for his part, expressed confidence, “With the improved terms on SBCorp loans, more stakeholders who urgently need aid to keep their businesses going will now be able to tap the fund.”

He encouraged industry stakeholders “to take advantage of these no-collateral, no-interest loans, while these are still available,” warning that, “there is a possibility that the funds for the program may be reallocated to other assistance programs if not utilized by the industry.”

In a news statement, Tourism Secretary Bernadette Romulo Puyat thanked DTI Secretary Ramon Lopez Jr. and SBCorp “for making these necessary adjustments to help tourism businesses thrive amid this global health crisis. While we see the vaccination of tourism workers as the light at the end of the tunnel for the industry, we also know that tourism businesses still badly need the government’s support to get by in the coming months as we wait for vaccine doses to arrive.”

According to Cacanando, the grace period on tourism loans “may be extended up to two years” for DOT-accredited MSMEs or barangay micro-business enterprises. The previous grace period was six months to a year.

While maximum loan amounts for enterprises continue to be P5 million (medium enterprises), P3 million (small), and P300,000 (micro), she said the loan amount “shall not exceed 15 percent of annual sales, or 20 percent of asset size, whichever is higher,” based on the company’s financial statements for 2018 or 2019 filed with the  Bureau of Internal Revenue (BIR). Previously, loan amounts  were based on “whichever is lower,” annual sales or asset size.

Shorter biz track record

The SBCorp head also said MSMEs with existing loans under the CARES for Travel program “may apply for additional loans” provided they don’t exceed the maximum loan amounts in their respective categories, “and their BIR-filed FS supports a higher loan amount.”

For another, the existing borrower “may be granted an increased loan limit…provided, a) six months salaries and wages during the year being evaluated equals at least 20 percent of annual sales; and b) the approval goes though the SBCorp Credit Committee.”

In addition, SBCorp now allows tourism MSMEs “legitimately operating for at least one year as of loan application date.” The earlier requirement was MSMEs should have been operating for one year “immediately prior to March 16, 2020.”

According to the Department of Tourism, about 4.8 million workers have been affected by the Covid-19 pandemic, as local and global travel restrictions were implemented.

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