Solons welcome rural banks’ offer on ’soft loans’

Senators considered “a welcome development” the government plan for the Department of Trade and Industry and rural banks to offer soft loans—meaning minimum interest and no collateral—to micro, small and medium enterprises (MSMEs) so they could give their workers their 13th month pay.

Senate Labor committee chairperson Senator Joel Villanueva said the loans would not only help the MSMEs rebuild their businesses but would also ensure they had enough available cash to pay for the salaries and benefits of their employees, including the 13th month pay.

He said under the “Bayanihan to Recover as One” or Bayanihan 2 law, a P10- billion funds are given to the DTI’s Small Business Corporation to expand its assistance to enterprises that are affected by the COVID-19 pandemic.

He said the access to capital is extremely important for MSMEs so they could survive the effects of the pandemic, since operations of most businesses remain limited.

According to Villanueva, he understood the predicament of some establishments who sounded the alarm on their prospective inability to pay the mandated 13th-month pay.

He also acknowledged that some businesses already advanced their 13th-month payout in April and May, at the height of the enhanced community quarantine enforced in Luzon.

“Those who are managing to keep their businesses afloat are really in a bind. Their limited operations are just enough to cover their day-to-day costs, but not sufficient to fulfill their obligations such as the mandatory 13th-month pay,” he said.

Senator Juan Edgardo Angara said the loan could be used by MSMEs to pay the 13th month.

“That is unless the MSMEs have already closed down. But I guess those which survive, this would be a huge help to them,” he added.

He also noted that the Bayanihan 2 law set aside funding for credit facilities for MSMEs which they could loan in order to be able to give workers their 13-month pay.

Senate minority leader Franklin Drilon said he welcomes the latest pronouncement from DOLE because the law, Presidential Decree 851, does not provide an exemption in the grant of the annual 13th-month pay.

“A subsequent memorandum, specifically Memorandum Order No. 28 issued by then-President Cory Aquino in 1986 while she exercised legislative powers, does not exempt ‘distressed’ companies from granting a 13th-month pay to their employees,” Drilon said.

“Such an exemption was in the implementing rules issued in 1975. However, there is nothing in the law which provides for that exemption and that was superseded by President Cory’s issuance,” he pointed out.

Sen. Aquilino Pimentel III, who chairs the committee on trade and commerce, also said the 13th month pay was really “salary” under current laws.

“It is just called 13th-month pay. Hence it must be paid. Employees are more distressed compared to their capital providing employers. Hence the employees’ interests and needs must not be sacrificed at all or in any way,” Pimentel said.

He said other sectors should make sacrifices, not workers.

Meanwhile, Labor Secretary Silvestre Bello III said: ““I’m very happy to say that I just received a letter from Secretary Mon Lopez of DTI, my partner, that they have a fund of P10 billion in the Small Business Corporation, this is an attached agency of the Department of Trade and Industry and they are willing to share about P4 billion. Soft loans for micro and small business enterprises without any collateral so that they can pay the 13th month pay of their employees,” he added.

“And then I also have a call, partner, another good news. I have a call from the president of the Rural Bankers Association of the Philippines, Ms. Liza Timbol, telling us or advising us that all the rural bankers are willing to provide soft loans to all micro and small business enterprises so that they can pay the 13th month pay of their employees,” the DOLE chief said.

Asked on where these companies can apply for the soft loan, Bello said, “They can apply with the government (banks), that is the Land Bank of the Philippines or the DBP (Development Bank of the Philippines) or just like what I’ve said, all the banks in Metro Manila and throughout the Philippines are ready to lend.”

“And what is more impressive is the volunteerism of rural bankers, their president called me and told me that they are willing to give soft loan and when we say soft loan, they mean minimum interest with no collateral requirement,” he added.

Aside from providing a soft loan, Bello said another option is to provide subsidies to these companies.

“We addressed this to...the President, if there are standby fund or savings, is it possible to subsidize at least the micro and small business enterprises,” he added.

The assistance will be provided to companies that are having a hard time raising money for the payment of the 13 month pay due to the coronavirus disease pandemic.

Under the law, private companies are mandated to pay the 13th-month pay of their employees on or before December 24. With PNA

Topics: Department of Trade and Industry , MSMEs , 13th month pay , COVID-19 pandemic
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