SBCorp plans 30% default rate on microloans – Manila Bulletin

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SB Corporation (SBCorp), the microcredit arm of government, expects its overall default rate to double to 30%, from 15% before the pandemic.

SBCorp President / CEO Maria Luna E. Cacanando said during the virtual ceremony to launch her 13th month loan facility. Borrowers have suffered financial hardship caused by the lockdowns since last year as they had to temporarily close their stores.

Cacando noted that before the pandemic, SBCorp had experienced a default rate of only 12-15%, similar to that of other micro lenders. She acknowledged that defaulting on the loan is part of doing business with all lenders.

With the pandemic, SBCorp expects a higher default rate of 30%.

In return for their micro and small businesses, she said, SBCorp continued to implement relief measures by extending the grace period and moratorium measures provided for in the Bayanihan Law 2 from March to December 2020. .

She said several of their borrowers have requested relief and a longer grace period. She pledged that SBCorp would continue to provide assistance measures to their borrowers, but that they would also implement legal processes such as issuing letters of formal notice. She stressed that loans cannot be left unpaid by borrowers, stressing that they are also accountable to the Audit Commission.

“No one is spared by the legal process,” Cacanando said. Thus, she urged the borrowers to cooperate to avoid reaching such a situation.

Trade and Industry Secretary Ramon M. Lopez, who is also chairman of SBCorp, noted that in this time of crisis all micro-borrowers need is an extension of the grace period and relief.

Lopez noted that before the pandemic, other regular DTI microcredit programs like P3 or Pondo sa Pagbabago in Pag-Asenso had marginal default rates.

As of Friday, November 12, SBCorp has approved a total of 25 13th month loan facility applications aimed at helping micro and small businesses finance their employees’ 13th month mandatory salary.

SBCorp reported receiving 77 loan applications, 25 of which were approved for a combined loan amount of 5.05 million pesos.

The agency has opened applications since November 2 this year for micro and small businesses that have been registered with the Ministry of Labor and Employment. The deadline for submitting the loan application is December 7th. There are over 11,000 DOLE registered businesses that have been affected by the pandemic and have taken advantage of the flexible working arrangement from March 16, 2020 to October 15, 2021.

Of this figure, around 8,000 micro and small businesses registered with potential employees of 200,000 are qualified under the program. Only those who fall under the DOLE database will be eligible for the 13th month payday loan facility, which has an available fund allocation of 500 million pesos.

In addition to increasing the loan fund to 500 million pesos out of Bayanihan 2’s initial funding of 200 million pesos, the agency also increased coverage to 40 employees per company from 20 employees. The loanable amount is calculated at P12,000 per employee multiplied by the number of employees. This means that if a borrowing company has 40 employees, the maximum loan amount is 480,000 PP.

Commerce and Industry Secretary Ramon M. Lopez, who is also chairman of SBCorp, said those who cannot be accommodated as part of the facility can apply to the regular CARES program. The CARES program provides loans for the working capital needs of businesses affected by COVID-19.

Cacanando said they pledged to release all loan amounts approved in December or before Christmas. Cacanando pledged to facilitate the processing of loan applications, all of which were filed online, noting that they were able to process 2,000 to 3,000 loan requests in one month for their regular programs.

Companies are urged not to wait until the deadline, December 7, to file their applications in order to avoid clogging SBCorp’s website and ensure the release of the 13th month of employee pay in time for the celebration of Christmas.

The 13-month loan facility bears no interest, but borrowers are charged a 4% service charge. Borrowers must repay the loan within 12 months including a 3 month grace period.


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