Camarines Sur 2nd district Rep. LRay Villafuerte has highlighted the sluggish uptake of supposedly easy loans by Covid-hit travel and tourism-related micro, small and medium enterprises (MSMEs) at the height of the pandemic, as reported by the Small Business Corp. (SBCorp).

Villafuerte, a principal author of both the Bayanihan 1and Bayanihan 2 laws, said this revelation has “confirmed the view by certain legislators like him in the previous Congress that the last-minute diversion to this bailout package of the amount originally intended under the House-approved Bayanihan 2 to build job-intensive tourism infrastructure nationwide had undermined government efforts to create jobs in, and quicken the recovery of, our once booming tourism sector".

The veteran solon was referring to the previous 18th Congress when these Covid-response measures were legislated. He was the deputy speaker for finance at that time.

The SBCorp revelation hits a sore spot for Villafuerte since he was among those who aggressively pushed for infusing the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) with P10 billion for infrastructure spending.

He had argued that such funding would create jobs for dislocated workers in the tourism sector during at the height of the Covid-19 pandemic while at the same time improving facilities leading to tourist sites while the nation was still on lockdown.

“But this infra spending plan for TIEZA was subsequently hijacked as the House-approved tourism infra budget proposal of P10 billion was realigned during the bicam (bicameral conference committee negotiations on the then-Bayanihan 2 bill), all because of the vigorous lobbying among senators for the fund diversion by DOT in tandem with big-time (tourism) industry players,” Villafuerte, now the president of the National Unity Party (NUP), said.

In a December news release, the SBCorp disclosed that of the P7.93 billion released by the Department of Budget and Management (DBM) for zero-interest, no-collateral loans for all MSMEs devastated by the Covid-driven global health and economic crises, P4 billion was allotted for travel and tourism-related loans under the “CARES for TRAVEL" component of Bayanihan 2’s rescue package for MSMEs in the trading, manufacturing, services, agriculture, tourism, and other business sectors.

CARES for TRAVEL stands for Covid-19 Assistance to Restart Enterprises-Tourism Rehabilitation and Vitalization of Enterprises and Livelihood.

“Unfortunately, uptake of tourism loans was and remains sluggish. As of December 2022, only the amount allotted for tourism MSMEs remains from the original DBM disbursement,” the SBCorp said in the news release. “As of 30 November 2022, only P329 million-worth of loans to 735 tourism enterprises have been released by the Corporation," it added.

And because of this low loan uptake, SBCorp bared plans to make this unused portion originally meant for tourism-related enterprises available to MSMEs in other sectors beginning this January.

Media reports have traced the low number of loan releases to tourism enterprises and other MSMEs to the following reasons: 1) the tedious requirements imposed on loan processing, which led to the rejection of many applicant-borrowers; and 2) the high service fee of 4 percent to 8 percent imposed by SBCorp.

“The CARES loans were interest-free and collateral-free, but the steep service fee cancelled out the fact that the financial aid was offered at zero interest,” Villafuerte said. “This had apparently turned off or scared away many prospective borrowers who were wondering how they would be able to pay back such loans when their establishments were still closed because of the community lockdowns and travel restrictions.”

Under CARES, Covid-hit MSMEs could apply for loans from P10,000 to P5 million each at zero interest and no collateral requirement.