COA finds almost P5B in Bayanihan 2 MSME loans left unused
The Commission on Audit (COA) reported on Wednesday, March 2 that around P4.99-billion allocated for loan distribution micro, small, and medium enterprises as part of Bayanihan 2 act was left stagnant.
Through the COVID-19 Assistance to Restart Enterprises (CARES) Program, the Small Business Corporation (SB Corp) received P9.08-billion to be distributed as collateral-free and 0 percent interest loans to MSMEs.
In the COA's 86-page report, SB Corp released only P4.09-billion or 45.04 percent of the P9.08-billion, leaving P4.99-billion or 54.96 percent unused. SB Corp is a financing branch of the Department of Trade and Industry (DTI).
The COA in its report listed two major reasons as to why over half of the budget was unspent.
First, the COA saw an “insufficiency” in SB Corp’s human resources.
“We found that the SB Corp adopted an automated system to process loans, however, there were no significant adjustments in human resources. Despite this challenge, the SB Corp utilized ₱4.09-billion, which is 273% higher than its usual budget of ₱1.5-billion for its regular program,” read the COA’s 86-page report.
Second, the COA detected hesitancy on the client-side to avail of the loans, particularly among tourism-based companies.
“The bulk of the budget is allocated for the tourism industry. Many tourism-based companies are hesitant to restart their business due to the multiple imposition of Enhanced Community Quarantine in the country,” it added.
“Of the 995,745 potential clients of SB Corp, only 48,010 MSMEs applied. That is an availment rate of only 4.82 percent.”
Out of the 48,010 loan applicants, the COA's report only listed 28,222 MSMEs who were actually served by the program.
Approximately P1.50-billion went to 23,687 “micro” enterprises, comprising the bulk of the beneficiaries at 83.93 percent.
P1.46-billion went to 3,057 “small” enterprises representing 10.83 percent of the total beneficiaries.
P1.09-billion went to 729 “medium” enterprises, or about 2.58 percent of all the beneficiaries.
Interestingly, the COA also found that around P45.27-million went to 749 “unidentified” enterprises, or 2.64 percent of the beneficiaries.
It further expounded that there were “deficiencies and gaps” in SB Corp’s execution of the program, citing that out of the 48,010 MSMEs that applied, around 4,378 or 9.12 percent canceled.
According to a COA survey, some common reasons for the loan cancellation included long processing times, and non-communication on the client’s application status. They also found that SB Corp had no way of ensuring that the released loans were being used as intended; to assist MSMEs in pandemic recovery.