How to Access Government Loans in the Philippines

When there is a free flow of money within a country, there is increased room for growth within its economy. The financial buoyancy and access to government credit facilities of citizens within a country can easily help to tell how well they are doing.

Government lending programs are incentives created by administrations to help their citizens gain access to funds for various reasons. The government of the Philippines has created various means to achieve this and give its people an easier route to succeed in their endeavors. These loans are available to every Filipino, with preferences for people who may not have access to other types of private credit facilities. 

These Philippines government loans are beneficial for the following reasons:

·  They help to provide relief against natural and economic disasters.

·  These loans encourage and stimulate entrepreneurship and new ideas.

·  They improve the quality of life of Filipino citizens.

·  They increase the human capital resources of the country.

·  The government loans increase the economic strength of the country.

Overall, the benefits of these loans are for both the citizens and the country at large. The citizens get to borrow money from their governments and use these credit facilities to better themselves and their country.

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Philippines Government Lending Programs

Government lending programs and loan programs are created to help people that need them. There are some citizens down on the economic ladder. These people are believed to not have due access to credit facilities that some loan companies offer.

This may occur due to a lack of collateral, low seed capital, and other economic factors. The government loans programs are there to fill in this space and allow anyone to access them. 

It is important to know that a Filipino government loan does not always mean that the government is providing funds. Sometimes that is the case, and the funds are usually from taxpayer’s money.

However, some loans are backed or guaranteed by the Philippines government. This means that they have entered an agreement with other organizations or individuals to provide funding for the loans, with a clause that they (the government) will be responsible for the loan if anything goes wrong.

Government-backed loans are common, especially post the economic and financial crisis that ravaged the world with the COVID-19. The Filipino government became more active in the plight of its citizens during and after the pandemic and provided more of these loans to improve their economic position.

These loans and other incentives have contributed to the Philippines’ economic recovery trend observed by experts in 2021. The country’s economy grew by 7.7 percent in the last quarter of 2021, bringing a gross growth of 5.6 percent for the year. 

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Public (Government) Lending vs Private Lending Programs

As stated earlier, private companies create and provide private lending schemes. Because most of them are out to make a profit, and their terms are usually more stringent.

Generally, when compared to the private loan companies, government loans may not require as many background checks, a more flexible repayment plan, and little to no penalties for defaulting. This has made the Philippines government loan programs very competitive.

The process may take an extended time, and selection criteria and requirements may be tougher than usual.

General Types of Government Loans in the Philippines (Descriptions and Requirements)

There are different types of loans that the Philippines government created. These loans were created to meet specific needs across the Filipino populace.

The loans can be classified into broad categories as follows:

·  Small and Medium Enterprises (SMEs) and Business Loans

·  Housing and Mortgage Loans

·  Student and Educational Loans.

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1. Small and Medium Enterprises (SMEs) and Business Loans

The Philippines is rich in various MSMEs that contribute to economic growth, especially in rural areas. The government had no choice but to make funds available for these sets of businesses so they could thrive in tough economic times.

The pandemic led to an expansion of the initial program by the Philippines government and an increase in the number of loan programs. A few of the government loans are as follows:

• Pondo sa Pagbabago at Pag-Asenso (P3)

The P3 scheme is a type of loan that provides small businesses with funding up to 200,000 PHP. The facility usually comes with a 2.5% interest rate monthly. Applicants are expected to have a government-issued ID, a Barangay clearance, and complete an application form.

• COVID-19 Assistance to Restart Enterprises (CARES) Program

This was a spill from the original P3 programs as a result of the effect of the pandemic on the Philippines economy. It is an Enterprise Rehabilitation Financing for small businesses, providing interest-free loans.

Businesses can borrow up to 200,000PHP if their asset size is less than 3 million PHP. At the same time, those with an asset size of up to 15 million PHP can get funds up to 500,000 PHP. 

There is a maximum grace period of six months on this loan. Some requirements for the CARES program include evidence that a Filipino owns the business, a government ID, business permits for the years 2019 and 2020, and a verified e-wallet account. Applicants are advised to log on to their website to fill out and complete the applications.

• Helping the Economy Recover Through OFW Enterprise Startups (HEROES) Program

Overseas Filipino Workers are also an essential part of the Philippines economy, so this program was created to cater to them. Applicants can borrow funds up to 100,000 PHP devoid of collaterals and interest. There is a service charge of 6 percent on 24-month loan repayment plans and 8 percent on 36-month loan repayment plans. 

The requirements for the HEROES program are a government ID, a video presentation of the business idea, a certificate of completion of a course at the Philippines Trade Training Centre, and Department of Trade and Industry (DTI) registration.

• Government Loans for Agricultural Businesses

Through the Agricultural Credit Policy Council (ACPC), the Philippines government has provided some loans for entrepreneurs in the agricultural industry. Some of these loans are listed below.

a. Kapital Access for Young Agripreneurs (KAYA)

b. Sikat Saka Program (SSP)

c. Agri-Negosyo Loan Program (ANYO)

d. Sure COVID-19 Program.

2. Housing and Mortgage Loans

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In the Philippines, the government offers one loan for housing and a mortgage. This loan is under the Pag-IBIG Fund as the Affordable Housing Loan. The government loan program is to help minimum wage earners get affordable housing without much hassle and stress.

The loans can be given to borrowers for various reasons such as home construction, home improvement, home repurposing, purchase of lands, purchase of ready-made homes, and refinancing existing house loans. Applicants must be less than 65 years old on the application date and must not be older than 70 years old on the maturity of their plan.

In addition, they should be able to encumber a property legally and must have been a member of the Pag-IBIG fund for at least 24months–with active savings. Other requirements for this loan are available on their website, where the application is completed.

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3. Student and Educational Loans

There are two types of student loans backed by the Philippines government. They are:

• CHED Student Loan Program

The Philippines Commission coordinates this on Higher Education. To qualify for this loan, students must be citizens of the Philippines and be enrolled in a college or postgraduate degree. Also, applicants must not have received any other form of educational assistance from the Philippines government in the past.

• SSS Educational Assistance Loan Program

The EALP is a program of the Philippines Social Security Service. The loan program is for SSS members under 60 years of age. Depending on the type of degree program and study duration, repayment plans may differ.

The SSS charges a six percent service charge on this loan and a two percent maintenance fee on all loan balances. The SSS requires a valid ID, proof of beneficiary status, billing details from the school of choice, and proof of monthly income to consider an applicant’s submission.

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Final Thoughts

In its capacity, the Philippines government is doing its best to provide a wide variety of loans to its citizens. While each loan category comes with distinct requirements, chances are every citizen would find a type of loan that fits their description and needs.

For the benefit of everyone, it is advisable to put all loans to good use and repay when due so that other citizens could benefit from this goodwill from the government.