5 Government Loans for Small Businesses in the Philippines

With the COVID-19 Assistance to Restart Enterprises (CARES) program ending last January 31, 2022, the number of government loans small businesses can apply for shrinks. This can be worrisome, considering how much COVID-19 has affected small businesses in the Philippines. 

All is not lost, however. There are still several government assistance programs for small businesses in the Philippines recovering from the pandemic. The following section will provide a rundown of everything you need to know about government loans you may apply for. 

5 Government Loans for Small Businesses in the Philippines

1. Pondo sa Pagbabago at Pag-Asenso (P3)
2. RISE UP Turismo
3. Helping the Economy Recover through OFW Enterprise Startups (HEROES)
4. MSME Credit Guarantee Program (MCGP)
5. Sustaining Trade Access to Primary Food and Link to Enterprises (STAPLES)

These government loans for small businesses in the Philippines are offered for various industries. Below is information about the five programs, their eligibility, terms, and requirements.  

Pondo sa Pagbabago at Pag-Asenso (P3)

Informal lending is a common practice among micro-entrepreneurs. One of the most financially harmful is known as “5-6” lending, where borrowers have to pay up to 20% interest on their loan every month. 

To prevent such practices and provide micro-entrepreneurs with convenient financing options, the government introduced the Pondo sa Pagbabago at Pag-asenso (P3) program. 

Who are eligible?

The P3 program was designed for micro-entrepreneurs who had an existing business before the pandemic. These include market vendors, sari-sari store owners, and stall owners, to name a few.

What are the terms?

• Loanable amount: P5,000 – P200,000 (depending on the size of your business and ability to pay)
• Interest rate: 2.5% monthly 
• Loan term: If you intend to loan below P50,000, the term is capped at 18 months; for loans over P50,000, the maximum term is 30 months.  
• Grace period: 6 months

What are the documentary requirements? 

• Accomplished P3 loan application 
• Proof of legitimate business running for at least one year
• Proof of one year of residence
• Valid government ID
• Barangay clearance
• If you intend to loan more than P50,000, you will need a DTI Business Name Registration Certificate 

To learn more about the P3 program and to apply, visit the DTI P3 website.

RISE UP Turismo

It’s no surprise that tourism was one of the most vulnerable sectors due to local and global lockdowns during the pandemic. As a way to stimulate recovery and growth in the sector, the Small Business Corporation (SB Corp) created the RISE UP Turismo Loan, which follows up on the CARES for Tourism Rehabilitation and Vitalization of Enterprises and Livelihood (CARES for TRAVEL) that launched during the height of the pandemic. 

This program is targeted toward businesses in the tourism sector that lost revenues over the pandemic. The loan’s coverage includes all tourism-related enterprises, whether DOT-accredited or not, such as transportation, events organizing, and souvenir shops, among others.

Who are eligible?

Three main business groups are eligible for the program: primary tourism enterprises (including hotels, resorts, and tour agencies); secondary tourism enterprises (including restaurants and tourist shops), and tourism support services. 

What are the terms?

There are two types of loans under the RISE UP Turismo Loan: the SME TURISMO Loan and the Micro TURISMO Loan, each with minor differences.

For the SME TURISMO Loan:

• Loanable amount: Maximum of P5 million
• Basis of loan amount: Possibly up to 15% of prior years’ sales; loans over P3 million will be based on your BIR-filed financial statements 
• Interest rate: A one-time service charge ranging from 4% to 8%, depending on your repayment term.
• Loan term: Payable monthly for up to 4 years
• Grace period: Up to half of the loan term, on principal only

For the Micro TURISMO Loan:

• Loanable amount: Maximum of P300,000 per borrower 
• Basis of loan amount: Up to 20% of your existing business assets 
• Interest rate: A one-time service charge ranging from 4% to 8%, depending on your repayment term.
• Loan term: Payable monthly for up to 4 years 
• Grace period: Up to half of the loan term on principal only  

What are the documentary requirements?

Both loan types will require the following documents:

• Government-issued ID
• Barangay permit for loans not more than P100,000
• BMBE Certificate or Mayor’s Permit for loans more than P100,000
• Photos and a 1-minute video of business operations and assets
• Corporate documents (if applicable)
• At least one year of business operation, as evidenced by business permits 

To register and view the complete list of eligible enterprises, visit the RISE UP Turismo Loan page of the SB Corp website.

Helping the Economy Recover through OFW Enterprise Startups (HEROES)

Businesses worldwide were forced to shut their doors amid the pandemic, meaning many overseas Filipino workers lost their jobs. A Philippine Statistics Authority survey found that the OFW population declined by almost 19% in 2020. 

To help unemployed, repatriated OFWs, the government created the Helping the Economy Recover Thru OFW Enterprise Start-Ups program. This gives OFWs the chance to start their own business and rebuild their lives in their home country.

Who are eligible?

Land-based and non-professional OFWs who returned home due to the layoffs during the COVID-19 pandemic may apply for this loan. 

What are the terms?

• Loanable amount: Repatriated OFWs may borrow from P30,000 up to P100,000
• Interest rate: No interest nor collateral required
• Grace period: Up to 12 months

What are the documentary requirements?

• Certificate of Completion of Training issued by the Philippine Trade Training Center (PTTC)
• Scanned copy of passport
• Video presentation (You will be guided on how to accomplish this during PTTC training)
• Business Model Canvass (Required for loan amounts exceeding P50,000)

To learn more about the program and the free PTTC one-day online training, visit the HEROES page of the Small Business Corporation website. 

MSME Credit Guarantee Program (MCGP)

Micro, small and medium enterprises (MSMEs) struggling with limited working capital after the pandemic may consider getting bank loans. However, not all MSMEs are capable of paying these back, limiting the loans they can apply for. 

This is why the Philippine Guarantee Corporation partnered with various banks to create the MSME Credit Guarantee Program to help MSMEs apply for loans that might have become out of their reach. 

Who are eligible?

This program was created for micro to medium-sized enterprise owners who have been affected by the COVID-19 pandemic. 

What are the terms?

• Loanable amount: Maximum of P50 million per borrower; Loans exceeding that amount will be subject to the approval of PhilGuarantee based on the guidelines for their Regular Credit Guarantee Program. 
• Loan term: 1 to 5 years
• Interest rate: Interest rates, collaterals, and securities will depend on the lending bank or financial institution.
• Guarantee limit: 50% of the principal loan amount
• Guarantee term: 1 year 
• Additional fees: Each amendment will cost P5,000

What are the documentary requirements?

The requirements will vary depending on where you apply for this loan. Contact a PhilGuarantee-partnered bank near you to inquire about the necessary application documents. 

You can find out more about the program on the official PhilGuarantee website.  

Sustaining Trade Access to Primary Food and Link to Enterprises (STAPLES)

The food business sector not only suffered from the lack of revenue due to lockdowns but also because of the increased expenses of incorporating social distancing and sanitation measures. 

To assist affected food businesses and food supply chains, the government created Sustaining Trade Access to Primary Food and Link to Enterprises (STAPLES) to help small businesses within the sector replenish their working capital and financially recover.

Who are eligible?

• MSMEs working in the retail food sector 
• MSMEs or applicants with no negative payment or unresolved major negative credit history. 
• Part of the food supply chain of an SBCorp-accredited FMCG food manufacturer
• Your business must be 100% Filipino owned or, if your business has foreign ownership, at least 60% Filipino owned. 

What are the terms?

The amount you can borrow will depend on your annual sales. The terms, such as repayment and service fees, will also depend on the size of your business.

For small sari-sari store owners:

• Minimum annual sale: P500,000
• Loan amount: 2% of annual sales (Minimum of P10,000)
• Repayment Term: 3 months
• Service fee: 3%

For big sari-sari stores, mini groceries, and convenience stores:

• Minimum annual sale: P2 million
• Loan amount: 2.25% of annual sales (Minimum of P45,000)
• Repayment term: 4 months
• Service fee: 3%

For medium-sized grocery, convenience stores, or dealers and small distributors:

• Minimum annual sale: P20 million
• Loan amount: 2.5% of annual sales (Minimum of P500,000; maximum of P5 million)
• Repayment term: 6 or 12 months
• Service fee: 3% if 6-month repayment, 6% if 12-month repayment

What are the documentary requirements?

Depending on the size of your business, you will need a different set of requirements. 

Requirements for small sari-sari store owners:

• Valid ID
• Bank or digital bank account
• Barangay business permit for 2019 or 2020
• Two photos of business signage, inventories, or fixed assets (submit in JPEG format)

Requirements for big sari-sari stores, mini groceries, and convenience stores:

• Valid ID
• Bank or digital bank account
• Mayor’s permit for 2019 or 2020
• Two photos of business signage, inventories, or fixed assets (submit in JPEG format)

Requirements for medium-sized grocery, convenience stores, or dealers and small distributors:

• Valid ID 
• Bank or digital bank account
• Mayor’s permit for either 2018, 2019, or 2020
• If your intended loan exceeds P1 million, you must submit the latest BIR-filed Balance Sheet to certify that your business is not a large enterprise.

To learn more about the loan program and how to register, visit the STAPLES page on the Small Business Corporation website. 

Choose the Right Loan for You 

If your small business is struggling to get back on its feet after the pandemic or any other crisis, applying for financial aid can be a big help. These five government assistance programs for small businesses in the Philippines can be just what you need to recover what you lost over the pandemic. 

Of course, it’s always important to do your research and consider other financers before applying for a business loan. The government isn’t the only place you can go to for financial help.

Check out JK Capital, which provides loans for small businesses to help you get back on your feet and succeed in the new normal.