2% Interest Rate Subsidy for LGUs in Bayanihan 2

Land Bank of the Philippines (LANDBANK) grants a 2% interest rate subsidy per annum on new and existing loans of Local Government Units (LGUs) to help communities recover from the impact made by the pandemic.

This subsidy is part of the provisions of Republic Act No. 11494 or “Bayanihan 2.” LANDBANK has allotted a P1-Billion interest subsidy for loans from LGUs.

The subsidy is utilized to loan interest of LGUs until December 31, 2022, or until the interest subsidy fund is spent.

The subsidy is shared among LGUs: P10 million for cities and provinces and P5 million for municipalities.

“We strongly encourage our LGUs to make full use of credit facilities subsidized by the national government to bankroll development projects in their respective localities. This will contribute greatly to reviving local economies and helping the country recover from the impact of the COVID-19 pandemic,” said LANDBANK President and CEO Cecilia C. Borromeo.

Qualified LGUs may avail of the loan interest subsidy for projects in line with the Bayanihan 2 objectives, which but are not limited to, permanent working capital such as for the purchase of agricultural produce, acquisition of equipment, construction of facilities for linking of products to the market such as market infrastructure development and improvement, mobile palengke, collection and buying stations, and other related facilities.

LGUs with loans for projects and programs that render basic and support services, social welfare and healthcare, and other infrastructure activities are also qualified to avail of the interest subsidy.

“The loan for these projects shall bear a fixed interest rate of 4% per annum until the end of 2022, wherein the remaining 2% interest rate shall be charged to the LGU. Interest rate shall be subject to annual repricing thereafter based on benchmark rate plus applicable credit spread based on credit rating of the borrower, but shall not be lower than 4% per annum. Borrowers may pay their loan up to 15 years inclusive of up to three (3) years grace period on principal payable based on cash flow,” stated in a press release from LANDBANK.

This subsidy is made possible by LANDBANK’s RISE UP LGUs (Restoration and Invigoration package for a Self-sufficient Economy towards UPgrowth for LGUs) Lending Program which was launched last July to help provide support to LGUs in implementing their recovery plans.

LANDBANK has approved loans to 156 LGUs amounting to P52.27 billion. (ASC)