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Business

DBP releases P8.5 billion COVID-19 loans to MSMEs

Elijah Felice Rosales - The Philippine Star
DBP releases P8.5 billion COVID-19 loans to MSMEs
DBP president and CEO Emmanuel Herbosa said the amount comes from the bank’s Rehabilitation Support Program on Severe Events (RESPONSE), including its attached program RESPONSE for MSME Recovery, for the first semester.
STAR / File

MANILA, Philippines — To support micro, small and medium enterprises (MSMEs) recover from the pandemic, state-run Development Bank of the Philippines (DBP) has extended P8.5 billion in loans to 90 firms in need of working capital to restart their operations.

DBP president and CEO Emmanuel Herbosa said the amount comes from the bank’s Rehabilitation Support Program on Severe Events (RESPONSE), including its attached program RESPONSE for MSME Recovery, for the first semester.

Under RESPONSE, the DBP has issued a total of P4.8 billion in borrowings to 30 firms, mostly based in lockdown-hit Luzon, engaged in the various industries of accommodation, food service, wholesale and retail trade, public administration and defense, as well as finance and insurance.

Public institutions availing themselves of the credit facility are given a repayment deadline of up to 15 years with a grace period of three years. Private firms are granted 10 years to repay their loans with a similar extension as to state agencies.

Response can award a loan amount of as much as 95 percent of a project’s cash requirement or the borrower’s capital needs. The interest rate will be computed on the applicable benchmark at the time of drawdown on top of credit spread.

Public and private agencies may apply for RESPONSE loan to finance their rehabilitation from the damages of a calamity or force majeure events.

On the other hand, Herbosa said the DBP has released P3.7 billion in loans to 60 firms under the RESPONSE for MSME Recovery.

Broken down, 24 projects are located in Mindanao, 21 in Visayas and 15 in Luzon, spanning the industries of wholesale and retail trade, finance and insurance, agriculture, forestry and fishing, accommodation and food service.

Herbosa called on MSMEs and local agencies to take advantage of the program in funding their efforts to shield facilities and workers from the virus. He said measures should be taken by now in improving business continuity to minimize the impact of future crises.

Through the credit portfolio, MSMEs can apply for a loan of up to 100 percent of their operating expense based on their audited financial statement in 2019, prior to the pandemic. In exchange, they are required to retain all of their workers for a period of one year from loan approval.

In terms of repayment, DBP fixed the interest rate at three percent per annum, payable in three years with a grace period of 12 months for principal.

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