Manila: A total of 4.99 billion pesos ($95 million) — more than half of the funds allocated for COVID loans — was unused as of mid-2021, the state audit agency reported.
The fund was meant to be distributed to micro, small, and medium enterprises (MSMEs) under the “Bayanihan to Recover as One Act”, known as Bayanihan 2, an interest-free pandemic recovery loan program for small businesses, according to the Commission on Audit (COA).
In a report dated March 2, 2022, state auditors said the Small Business Corp. (SB Corp.), a state-owned company under the Department of Trade and Industry (DTI). had been allocated Php9.08 billion ($174 million) to be distributed to MSMEs.
SB Corp runs the COVID-19 Assistance to Restart Enterprises, also known as Bayanihan CARES, an interest-free and collateral-free financing program that aims to assist MSMEs recover from the adverse effects of the pandemic.
The borrower will only need to pay a one-time service fee, which is set at a maximum of 8% for a 4-year loan term.
More than half unutilised
But the COA said SB Corp. released only Php4.09 billion, or 45.04% of the P9.08 billion, as of June 30, 2021, the end of its audit period.
“Considering the need for immediate action and limited resources in government in general, these unutilised funds could have been used to fund other emergency measures to address the effects of the pandemic,” the COA said.
SB Corp., however, said the remaining amount was only Php2.03 billion as of January this year.
Reasons for under-distribution
The COA cited two major reasons why nearly 55% of the allocated amount was unused.
One was the “insufficiency” in SB Corp.’s human resources and the other was the “hesitancy of potential clients” to avail of the financial assistance.
The COA said SB Corp., which normally handles about Php1.5 billion for its CARES Program, was suddenly given the responsibility to distribute nearly P10 billion, which was “beyond its normal capacity” to process.
Automated application system
To cope with its mandate, SB Corp opted to adopt an automated system to process the loans — instead of making “significant adjustments” in its human resources to process the distribution of the huge amount, the COA said.
The hesitancy to borrow from the loan facility could be seen in the number of MSMEs that availed of loans from CARES during the September 2020-June 2021 audit period under Bayanihan 2.
Of the 995,745 potential clients of the state corporation, the COA said only 48,010 (4.82%) applied.
Launch
According to SB Corp’s website, the Bayanihan CARES was launched in October 2020. Among the entities or individuals qualified to avail of the loan programs for MSMEs include.
- Cooperatives
- Hospitals
- Tourism entities
- OFWs affected by COVID-19 pandemic and by other socio-economic reversals.
To avail of the loan, a borrower is required to pay a one-time service fee, which is set at a maximum of eight (8) percent for a 4-year loan term.
Loanable amount (for businesses operating for 1 year)
- Loanable amount from Php10,000 ($200) up to Php5.0 million ($100,000)
- With grace period of up to 12 months or one (1) year
- No collateral required
- No interest
Meanwhile, the Department Budget and Magement (DBM) said P6.49 billion from Bayanihan 2 remained "unused" as law expired.
Expired
The Bayanihan to Recover as One Act or Bayanihan 2 expired June 30, 2021. With no further extension of the law, these funds will be reverted to the national treasury, leaving the projects for which they were allocated hanging. The unused funds can no longer be disbursed by government as that would require another piece of legislation.
