MSME Bank Loans Rise as Pandemic Rages on

As the COVID-19 pandemic continues to wreak havoc in the Philippine economy–most specially in the small business sector with the new delta variant spreading like wildfire in key areas in the country, more Micro, Small, and Medium Enterprises (MSMEs) take on loans as the fight for their business rages on.

The banking industry saw increased loans from MSMEs in 2021 compared to 2020, as data from the Bangko Sentral ng Pilipinas (BSP) show that as of July 29, a total of PHP188.7 billion of loans were extended by banks to MSMEs, which is higher than the measly PHP8.7 billion bank loans extended to MSMEs as of the end of April 2020.

According to BSP Governor Benjamin Diokno Thursday, the data means that banks are continuing to extend financial relief to businesses during the COVID-19 crisis.

This comes as the BSP since last year has allowed banks’ MSME borrowings to serve as an alternative to reserve requirements, a move that aims to increase a bank’s liquidity, and to further a bank’s ability to grant even more loans to MSMEs, ensuring continuous economic activity even during the pandemic.

This leads to more businesses having the opportunity to adjust their loan terms to one that match their current revenue stream, and their capacity to pay the loan. (GFB)