COA: P4.99-B Bayanihan 2 funds to aid MSMEs still unused

A total of P4.99 billion or 54.96% of the released budget under the Bayanihan to Recover as One Act (Bayanihan 2) to supposedly aid the micro, small, and medium enterprises (MSMEs) was unutilized as of June 2021, the Commission on Audit (COA) said.

In a recent report, COA said the Small Business Corp. (SB Corp.), a state-run company under the Department of Trade and Industry (DTI), had been allocated P9.08 billion for the implementation of its COVID-19 Assistance to Restart Enterprises (CARES) program.

However, of this budget, SB Corp. was only able to use P4.09 billion as of mid-2021 to extend loans to 28,222 MSMEs, 23,687 of which were micro enterprises, 3,057 were small enterprises, 729 were medium enterprises, and 749 were unidentified enterprises.

“The SB Corp extended collateral free and 0% interest loans to thousands of MSMEs but it was unable to maximize its reach after utilizing only 45.04% of the funds made available under the Bayanihan laws as of June 30, 2021,” the report said.

Two major reasons

According to the state auditors, the first major challenge that may have caused this scenario was the “insufficiency” of SB Corp.’s human resources.

COA said that the SB Corp. only had to handle about P1.5 billion for this program under the name Pondo sa Pagbabago at Pag-asenso prior to the COVID-19 pandemic. That was why they were able to utilize about 98.84% of the initial P1 billion budget for the Bayanihan 1 through the CARES program, which covers the processing of 20,043 applications.

Yet, with the Bayanihan 2, the company had to distribute nearly ?10 billion which was “beyond its normal capacity” to process.

“The ?10 billion allocation for CARES under Bayanihan 2 was beyond the normal capacity of the SB Corp to process and release to MSMEs within the effectivity of the Bayanihan 2. We checked whether there were significant administrative adjustments made by SB Corp in light of the massive infusion of funds. We found that the SB Corp adopted an automated system to process loans, however, there were no significant adjustments in human resources,” COA said.

It noted that the utilized ?4.09 billion was 273% higher than SB Corp.’s usual budget of ?1.5 billion for its regular program.

The second major challenge COA saw was the “hesitancy of potential clients” to avail the financial assistance, noting that only 48,010 MSMEs or 4.82% applied out of the 995,745 potential clients of SB Corp.

“In spite of the lower number of potential beneficiaries that can be served by the program, still the SB Corp was unable to serve them. One major reason for this is that 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 ECQ (enhanced community quarantine) in the country,” COA added.

Further, out of the 48,010 loan applications, COA recorded a total of 4,378 or 9.12% borrowers who canceled their applications.

Their survey revealed that this cancellation was due to the “long processing time, and non-communication of the status of their applications.”

Considering all these reasons, the state auditors then recommended for SB Corp to:

• incorporate in its Performance Scorecard a set of metrics
• fast-track the development of IT-enabled Account Monitoring Module
• conduct monitoring visits and update relevant information of MSME borrowers
• establish/integrate relevant MSME databases

Citing the Philippine Statistics Authority (PSA), COA said there are a total of 995,745 MSMEs representing 99.5% of the total business establishments operating in the country.

An average of 73.1% of MSMEs were then forced to close their businesses due to the implementation of the strictest ECQ amid the pandemic, per an Asian Development Bank (ADB) survey.

A total of P11 billion was allocated to the CARES program through the Bayanihan 1 and 2 laws to extend loans to MSMEs whose businesses suffered drastic reduction in sales during the ensuing pandemic. —KBK, GMA News