As of July, more companies have been able to obtain bank loans. In addition, it will help them get back on their feet, said Tuesday the Bangko Sentral ng Pilipinas (BSP).
As local lenders were permitted to charge fresh loans to their required reserves, the central bank announced an increase in loans granted to micro. In addition, it was small and medium-sized enterprises or MSMEs in a statement.
On July 23, the BSP said 97 banks had issued loans to small businesses. It raised the average daily loan take-up balance to around 84.2 billion. The average daily balance of MSME loans paid to the reserve fund was just €9.9 billion in late April.
The central bank has allowed banks to tag additional MSME loans granted. It was because of the alternative compliance to reserve requirements after March 15. The number of borrowers is going to hold intact.
The regulator also reduced the credit risk weight for small business loans to allow banks to lend more to the industry.
MSME and the Aggressive Debtors
MSMEs are usually considered aggressive debtors compared with larger firms. There are more financially secure, which translated into higher interest rates.
The President’s economic team has been calling on banks to make it easier for budding entrepreneurs. It aims to secure credit.
Therefore, they have additional capital to revive operations and keep their workers employed after months under lockdown.
The same strategy has been pursued under the Bayanihan to Recover as One-Act. It means seeks to infuse ₱30 billion additional capital into the state-run Land Bank of the Philippines. And then, ₱15 billion to the Development Bank of the Philippines with hopes that these will translate into additional lending to the MSME sector.
Under the bill, loans below ₱3 million should not require collateral. And also, it should come with low-interest rates with a three-year payment period.
Overall, small firms account for 99.5 percent of local businesses and generate nearly two-thirds of jobs available, according to the Trade Department.
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