BANKING GROUPS on Tuesday vowed to lend more to small businesses struggling amid a coronavirus pandemic.
“The Bankers Association of the Philippines (BAP), together with its members will continue to assist micro-, small- and medium-sized enterprises (MSMEs) with their financing needs — whether through cash management services for their operations or loans that are needed for their expansion,” President Jose Arnulfo A. Veloso told an online forum.
These enterprises make up 99% of about a million business establishments in the country, based on 2018 data from the Department of Trade and Industry. They also generated 63.19% or 5.7 million jobs that year.
But these small businesses are among the most vulnerable amid coronavirus lockdowns that forced some of them to shut down.
“We realize the need to offer more MSME-friendly restructuring packages that allow borrowers to allocate more funds that enable them to overcome the financial drawbacks of the lockdown,” Chamber of Thrift Banks President Cecilio D. San Pedro said at the same forum.
Aside from lending to small businesses, microfinance institutions provided support during the pandemic through cash grants to poor households, access to markets and technology, and online training for businesses as they adapt to the so-called new normal, said Allan Robert I. Sicat, executive director of Microfinance of the Philippines, Inc.
“Soon, the country›s economy will be able to bounce back with the help and cooperation not only of financial institutions, but of all stakeholders, bearing in mind one goal of recovering as one,” he added.
MSMEs had to fine-tune their business models amid lockdowns. Many of them had to close shop in areas under a strict quarantine.
Small companies should go digital to survive under the new normal, said Angelito M. Villanueva, chairman of Fintech Alliance.ph.
He noted that financial technology companies have created e-wallets, one-stop apps, withdrawal systems and access points, QR-enabled transactions and digital loan marketplaces to help small businesses adapt to the new normal.
The Bangko Sentral ng Pilipinas (BSP) has provided relief measures to support the MSME sector, including allowing banks to count loans to the segment as reserve compliance. The central bank has also cut the credit risk weight for small business financing.
BSP Governor Benjamin E. Diokno said banks allotted an average of P183.9 billion worth of MSME loans as of June 17 as alternative compliance with reserve requirements.
The central bank also teamed up with the Japan International Cooperation Agency and other banking stakeholders for a credit risk database project that seeks to improve small businesses’ access to loans. — Luz Wendy T. Noble