Categories: Philippines

Anxiety Escalates as 13th Month Pay Loans Out and Employers are being Clueless Where the Funds will Go

The government has introduced a scheme to help finance small businesses 13th month payout, but companies worry the loan conditions are not enticing enough for distressed businesses that can spend the capital elsewhere or simply want to close down entirely.

To date, some 21,000 micro, small and medium-sized enterprises (MSMEs) have received funding under the COVID-19 Assistance to Restart Enterprises (CARES) Program of the Trade Department.

Loans worth P1 billion were given to 16,270 businesses, while another 4,814 firms approved for assistance would receive approximately P200 million by next week. To support 70,000 MSMEs, CARES has a cumulative budget of P10 billion. In view of this, Sergio Ortiz-Luis, president of the Employers Confederation of the Philippines (ECOP), a business association, shared that it would not be ideal to use CARES as a facility to finance holiday benefits, while the assistance was welcome.

CARES, as it is, is a relief scheme for MSMEs disadvantaged by the health crisis, which ensures that funds lent by the facility will be used for anything from supporting business activities to the procurement of new equipment and, in this situation, workers pay their 13th month pay benefits as required by statute before December 24.

This versatility is a problem. Worse though CARES money is interest-free, for loans due within 1 to 4 years, the government charges hefty service fees ranging from 4 percent to 8 percent. The longer the payment period, the bigger the payments are.

On the other hand, ECOP was the one who recommended that the government lend funds to MSMEs to ensure that cash-strapped firms would afford the mandated bonus to their workers. The plan comes after the labor department requested economic managers to help small businesses unable to fund payouts for the 13th month, equal to 1 month of compensation for workers with at least 1 year of service.

For the labor community, Kilusang Mayo Uno, subsidies rather than loans should be extended by the state to MSMEs. The party has recommended that the proposed P11 billion 2021 budget be re-channelled to the contentious National Task Force on Resolving Local Communist Armed Struggle for that reason. However, this will not be achieved because the national outlay next year is already being deliberated.

Jasmine C.

Mabuhay! An upcoming Newswriter for the Asian Affairs from the Pearl of the Orient - Philippines. Avid follower of celebrity gossips, fashion news. I got into writing so that my fellow Kababayan will be constantly updated with the latest news.

Recent Posts

V Surprises ARMY with Two Holiday Releases: A Festive Collab with Park Hyo-shin and “White Christmas” Cover

For K-pop fans, the Christmas season this year has become even more magical as several of their preferred stars reveal…

November 22, 2024

Celine Names TWS as Global Ambassadors Following Suzy Bae Announcement

After Suzy Bae's nomination as Celine's worldwide ambassador, the venerable French luxury fashion company has taken another bold step choosing…

November 22, 2024

Reddit Faces Widespread Outage, Users Turn to Workarounds Amid ‘Server Error’ Messages

Thousands of users of the well-known social network Reddit were left without access after a major outage of the website.…

November 22, 2024

Anne Hathaway Casted as ‘Verity’ in Colleen Hoover’s Book Adaptation

Anne Hathaway is slated to play the much expected film version of Colleen Hoover's best-selling book Verity in front of…

November 21, 2024

Gucci Set to Revolutionize Fashion Presentations with Unified Shows in 2025 under Sabato De Sarno’s Vision

Gucci is ready to change its presentation approach for 2025 in a radical action aimed to revolutionize the fashion industry.…

November 21, 2024

South Korea’s “Korea Discount”: Addressing the Governance Gap to Boost Market Value

As world investors wait for significant changes that might solve long-standing problems of governance and responsibility in South Korea's companies,…

November 21, 2024

This website uses cookies.

Read More