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Small Business Corporation will offer small and medium-sized enterprises interest-free loans to cover freight costs during the pandemic
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The facility is in response to calls for government to provide a quick-response fund from where exporters may draw money to advance freight cost
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Eligible borrowers are SMEs with asset size of P3 million to P100 million
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Borrowers must have been in operation as an exporter for at least a year and with at least three consummated purchase orders or letter of credits
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A one-year credit line will be granted within the Bayanihan COVID-19 Assistance to Restart Enterprises program threshold limit of 15% of sales
Small and medium-sized enterprises with at least one-year experience in exporting may apply for interest-free government loans to cover their shipping costs during the pandemic, according to the Philippine Exporters Confederation, Inc. (PHILEXPORT).
Small Business (SB) Corporation head of financing sector Lourdes Rosario Baula said the agency is responding to calls by PHILEXPORT president Sergio Ortiz-Luis Jr. for government to provide a quick-response fund from which exporters may draw money to advance freight cost once a shipping line booking has been made.
READ: PH exporters in distress over worsening supply chain snags
PHILEXPORT has been seeking assistance for exporters to cope with worsening pandemic-induced supply chain and logistics issues, including lack of vessel space, soaring freight rates, and container shortage that are resulting in shipment delays and huge losses.
“The increase in freight rates and cost of raw materials resulted in the increase of total production cost. With this scenario, the local exporters have to compromise their profit margin to meet export sales target and to keep their businesses afloat,” Baula said.
Eligible for financing are all types of projects of a qualified SME exporter affected by both enhanced and general community quarantine declarations.
Eligible borrowers are SMEs with asset size of P3 million to P100 million. Baula said SB Corp. can amend features of the lending program if there is demand from micro enterprises with asset size of less than P3 million.
Borrowers must have been an exporter for at least a year with at least three consummated purchase orders or letter of credits.
A one-year credit line will be granted within SB’s Bayanihan COVID-19 Assistance to Restart Enterprises (CARES) program threshold limit of 15% of sales based on Bureau of Internal Revenue-filed financial statements for 2019 and 2020.
Borrowing limit is P5 million.
CARES is a financing program that aims to assist micro, small, and medium enterprises recover from the adverse effects of the COVID-19 pandemic. The loan program is in compliance with Republic Act No. 11494 or Bayanihan 2, which mandated SB Corp. to expand its existing loan programs.
Loan availment will be up to 20% of the presented confirmed PO or LCs, with 20% as the estimated shipping freight cost.
Borrower SME exporters will pay a service fee of 1% for a 30-day term, 2% fee for 60 days, and 3% for 90 days.
Processing of application for the credit line will take two to three work weeks. Loan release is “not usually immediate” but if there is an urgent need, Baula said loan release can be within seven days.
Crediting of loan proceeds to the borrower will be through electronic fund transfer services Instapay or Pesonet.
For applicants with existing loans under the CARES program, Baula said loans under the facility for shipping cost will be on top of existing ones as long as within the threshold loan limit policy.
