Metro Manila (CNN Philippines, April 22) – The government assured support for small and medium enterprises who are struggling amid the COVID-19 crisis.
“We are considering guarantees for loans that micro, small and medium enterprises (MSMEs) might take because of a need of a working capital,” Chua told CNN Philippines.
A loan guarantee is a contractual obligation between the government, private creditors and a borrower. Under the contract, the government will cover the borrower’s debt obligation in the event that the borrower fails to repay the loan.
“There was also an announcement last week by DOF (Department of Finance) that they are going to allow net operating loss carry over so that the losses of business this year can be credited or carried over to the next year to reduce their tax payments,” Chua added.
The government earlier decided to provide small businesses with a wage subsidy in response to calls to include the middle class in the cash assistance program.
“I understand there are some really with no sales, and maybe they have enough savings or capital to survive for a month or two, this is why we decided to provide a wage subsidy,” Chua said.
An estimated ₱51 billion would go to employees of small businesses that regularly pay taxes and contribute to the Social Security System (SSS).
“One condition there is that the employer cannot layoff the workers, and the employee cannot resign because the main purpose of a wage subsidy like any country that does it now is to keep and retain employment,” Chua said.
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Chua admitted they experienced some technical problems early on, since the website could not accommodate the millions who were trying to find out if they are qualified.
He clarified that the SSS has already sent out hundreds of thousands of emails to inform those who qualified that they can now apply for the government’s wage subsidy.
“Even before the small business wage subsidy, we already deferred or gave a grace period for tax payments, for rentals, for payment of loans, for credit card, and so on,” Chua said.
“They are actually benefitting from that because that created additional liquidity or money for them to pay their workers and meet their other obligations,” Chua added.
The Department of Trade is also preparing a ₱1-billion fund to help small businesses restart operations after the Luzon-wide quarantine is lifted.
Acting Socioeconomic Planning Secretary Karl Kendrick Chua told CNN Philippines they are looking at the possibility of providing loan guarantees to small and medium businesses dealing with losses amid the enhanced community quarantine. He said details of the plan will follow.
