Government-backed loans during the pandemic

Government-backed loans during the pandemic -diarynigracia

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From overseas workers to small enterprises, the epidemic threatens the livelihoods of many. The government has provided many lending options to assist Filipinos in regaining their footing. Under Department of Trade and Industry (DTI) and Small Business Corporation (SB Corp), the Bayanihan CARES initiative seeks to assist MSMEs, OFWs, hospitals, and others impacted by the epidemic. As of December 31, 20211, the Bayanihan CARES program has authorized loans of PHP 6,59 billion for 39,242 MSMEs. Under the CARES HEROES initiative, the government has also provided 48.4 million pesos in loans for jobless OFWs to create their enterprises.

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How Do Loans From Private Institutions Differ From Loans From the Government?

A government loan is a loan that the government issues to help specific industries in the Philippines. This is implied by the term “government loan.” The government offers programs to lend money are not always available, and the criteria for qualifying for them might change at any time. Recent initiatives in the realm of financing are targeted at supporting people in navigating the effects of the pandemic on the economy.


Due to most government loans, they are not subject to interest charges and do not need security. Hence, they do have a service fee.



In contrast to government loans, private institutions’ primary objective is to preserve and expand their capital. Because of this, their requirements for taking out loans are more severe, resulting in better interest rates. On the other hand, loans from private institutions such as banks and private lenders are always available and come in a far wider variety of forms.


Therefore, if none of the government loan programs satisfy your requirements, you should seriously consider obtaining financing from one of these commercial banks.




List of Government-backed loans


1. COVID-19 Assistance to Restart Enterprises (Bayanihan CARES 2 Program) by DTI & SB Corporation


a. Who: SMBs impacted by the pandemic and quarantines.

b. Content: Initiated in May 2020, Bayanihan CARES is an interest- and collateral-free lending program oriented toward recovering small and medium-sized enterprises (SMEs) affected by the epidemic. The loan has simply a one-time service charge.

c. Loan Amount: PHP 10,000.00 to PHP 5,000,000.00 based on asset size, yearly sales, and submission of BIR-filed financial accounts.

  • Micro: up to 600,000 PHP
  • Small: up to Php 3 million
  • Medium: up to Php 5 million


d. Grace Period: Up to Six months for specific businesses and up to 12 months for particular sectors (during which you are not required to make loan payments).

e. Term: 1 to 4 years, depending on the amount borrowed.

f. Interest Rate: Zero interest rate, no collateral.

g. Repayment Conditions: A service charge ranging from 4% to 8%, based on the loan period and amount borrowed.

All applications must be submitted electronically using SB Corp’s Borrower Registration System (BRS) website. Through the internet, you must submit all necessary loan paperwork. After applying, SB Corp will communicate the following stages by email.


i. Requirements:

  • Completed online application form submitted through BRS
  • Evidence of a genuine micro, small, or medium-sized company (such as local government licenses) in operation for one year before March 2020.
    • Micro: asset size less than Php 3 million
    • Small: asset size between Php 3 and Php 15 million
    • Medium: asset size over Php 15 million up to Php 100 million
  • Documentation of a permanent business address
  • Valid government ID
  • A bank or electronic money account such as GCash is required.
  • Must not have any outstanding negative credit transactions
  • If a sole proprietorship, co-borrower identification is necessary.
  • A corporate secretary certificate is necessary for corporations and partnerships.
  • If filing financial statements with the BIR:
    • BIR 1701 for single proprietorships and BIR 1702 for companies Statement of income and balance sheet In the absence of BIR-filed financial statements,
  • Mayor’s permit (or barangay permit)
  • Inventory, assets, and property photographs
  • A one-minute video of the owner/president detailing the loan’s purpose, monthly sales, personnel count, and main assets.



2. Pondo sa Pagbabago at Pag-Asenso (P3 Program) by DTI & SB Corp


a.Who: Existing microbusinesses with less than 3 million PHP assets and nine or fewer workers.

b. Contents: The P3 program intends to help microentrepreneurs in the Philippines, who make up the majority of MSMEs, via convenient, accessible, and inexpensive loans. The initiative’s objective is to give an alternate financing option to 5-6 lending, often known as usurious informal lending practices.

c. Loan Amount: PHP 5,000 to PHP 200,000, depending on the business’s size and repayment capacity.

d. Grace period: of six months.

e. Loan Term: 18 months for loans under PHP 50,000 and 30 months for loans beyond PHP 50,000.

f. Interest Rate: 2.5% interest rate per month

g. Application Procedure: To apply for the P3 program, the applicant may visit a DTI Negosyo Center, a DTI local office, or a certified microfinancing institution.

h. Requirements:

  • Formalized loan application for a P3
  • At least one year of lawful company operation as a microentrepreneur
  • Evidence of one year’s residency
  • Valid government ID photograph
  • Barangay Clearance granted throughout the last three months
  • For loans exceeding PHP 50,000: DTI Certificate of Business Name Registration



3. CARES For Tourism Rehabilitation And Vitalization Of Enterprises and Livelihood (CARES for TRAVEL) by DTI & SB Corp


a. Who: SMBs in the tourist sector affected by the COVID-19 epidemic.

b. Content: CARES for TRAVEL is a component of the Bayanihan CARES initiative, which focuses on the tourist industry’s rehabilitation. In cooperation with the DOT, SB Corp will provide zero-interest, no-collateral loans to tourism-related SMBs.

c. Loan Amount: PHP 10,000.00 to PHP 5,000,000.00 based on asset size, yearly sales, and submission of BIR-filed financial accounts.

  • Micro: Up to Php 600,000
  • Small: Up to Php 3 million
  • Medium: Up to Php 5 million


d. Term: 1 to 4 years, depending on the amount borrowed.

e. Interest Rate: Zero interest rate, no collateral

f. Repayment Conditions: A 4% to 8% service charge based on the loan period and amount borrowed.

g. Application Procedure: Similar to that of Bayanihan CARES 2.

h. Requirements: Same requirements as Bayanihan CARES 2



4. Helping the Economy Recover Thru OFW Enterprise Start-ups( (HEROES) by SB Corp


a. Who: Overseas Filipino Workers who have lost their jobs and returned to the Philippines due to the COVID-19 epidemic.

b. Content: More than 300,000 OFWs have been repatriated and are presently jobless due to the worldwide epidemic. The HEROES initiative attempts to assist these OFWs by giving them loans for company startups.

c. Loan Amount: 30,000 to 100,000 PHP

d. Grace Period: Up to one year

e. Loan Duration: 24 to 36 Months (inclusive of grace period).

f. Rate of Interest: No interest and no collateral.

g. Repayment Conditions: 6% to 8% service charge based on the loan amount.


h. Application Procedure: Applicants must enroll for a free three-day online training with the PTTC at this website. After finishing the program, the candidate must prepare and submit the following criteria on the BRS website.


i. Requirements:

  • Identification granted by the government OWWA certification DTI Registration
  • Business presentation video (guidelines from the PTTC training)
  • For Loans over Php 500,000: Mayor’s permission



5. MSME Credit Guarantee Program(MCGP) by Philippine Guarantee Corporation (PhilGuarantee)


a. Who: SMEs impacted by the COVID-19 outbreak that needs bank loans for operating cash.

b. Content: In conjunction with the banking industry, PhilGuarantee works as an ordinary guarantee for loans made to MSMEs, covering a portion of the lender’s loss if the borrower fails. This enables PhilGuaranty to facilitate MSMEs’ access to bank loans they would not have otherwise obtained.

c. Maximum loan amount of 50 million PHP per borrower. Case-by-case, loans over PHP 50,000,000 may be approved.

d. Loan Duration: 1-5 Years

e. Interest Rate: The bank’s requirements for interest and collateral apply.

f. Coverage Guaranteed: 50% of the Principal

g. Guarantee Rate: 1% annual guarantee charge and 5,000 PHP amendment fee.

h. Guarantee Duration: 1 year, subject to review annually.

i. Application Procedure: Inquire with a PhilGuarantee partner bank about their particular MGCP application process and criteria.

j. Requirements: Based on the criteria of the partner bank,



How to Get a Government-backed up loan: Five Steps

  1. List Your Organization’s Needs

Before applying for a government loan, you should assess the demands of your company so you can choose the loan that best matches your present circumstances. You must understand the following:

  • What will you use the company financing for
  • How much you’ll need
  • How long will you repay the principal and interest?

By defining your requirements, you can develop a solid strategy (as well as backup plans) for earning the money you need to repay the loan.


Remember that you will thoroughly evaluate enterprises applying for government loans. For instance, CARES 2 and HEROES demand a video presentation in which you present your loan application.


  1. Conduct research and choose the best government loan for your needs

Not everyone is eligible for all available government loans. For instance, the Bayanihan CARES 2 initiative targets MSMEs affected by the pandemic, while the HEROES program is solely open to OFWs. Therefore, you should study and prepare appropriately.


When selecting a government loan, ensure that the loan amount, loan period, interest rate, and other essential facts align with your objectives.


  1. Prepare the Required Government Loan Application Documents

Each government loan has unique pre-qualification standards and documentation requirements. It would help if you organized everything so that the application process goes smoothly.


  1. Request a Government Loan

You must apply for Small Business Administration loans via their BRS website. However, other accessible government loans have distinct application procedures. Contact the various institutions to confirm that you adhere to the most current application requirements.


  1. Request Your Approved Loan and Create a Repayment Plan

Once your loan is granted, follow the government institution’s instructions on how to get your cash. Each institution has distinct methods for disbursing funds. For instance, Land Bank transfers the loan money to the borrower’s bank account in flat payments or installments.


If you completed Step 1 successfully, you should have a strategy for timely debt repayment. Ensure that you adhere to your payback schedule and have a backup plan.



Tips on having Government-backed loans

  • Benefit from the grace period. You are not required to make any loan payments during the grace period. This is the ideal time to get your company in shape and generate as much money as possible so that you can repay your debt.
  • Document every transaction associated with the government loan. With accurate accounting, you will know how much is being utilized and for what purpose, allowing you to modify your strategy appropriately.
  • Utilize your government financing only for your company. Money may be tempting to utilize for personal costs, particularly in light of the pandemic’s sufferings, but doing so would make it more difficult to repay the loan. Instead, focus on getting your firm back on track so you may utilize its profits to cover your expenses.





What is the best government loan for me?

The ideal government loan for your company is one for which you meet the eligibility requirements and which can supply the required finances. You may cross off the ones that do not apply to you from the list above. If several possibilities remain, you may eliminate those that do not match your organization’s needs.


I am starting a new company. Is a government-backed company loan accessible to me?

If you are a repatriated OFW who is jobless and eligible for the HEROES program, you may get a loan to launch a new company. However, this is not accessible to non-OFWs at this time.




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