The Accelerated Recovery and Investment’s Stimulus for the Economy of the Philippines or the ARISE bill is just a few steps away from being signed into law since it was passed by the House of Representatives to the Senate last Sunday, June 4. Once officially a law, House Bill 6815 will be able to jumpstart the economy to a more positive state and help many Filipinos, especially businesses amid the COVID-19 downturn.
The ARISE bill intends to help businesses transition to the new economic conditions faster, through stimulus packages provided for multiple sectors in need and support to the Build, Build, Build program of the government. Sectors who will benefit are Micro, Small, and Medium-scale Enterprises (MSMEs), wage earners, freelancers, startups, self-employed, displaced workers, and even students, etc.
In the current form of the draft, the ARISE Bill aims to reinvigorate the Philippine economy through a PHP1.3 Trillion stimulus (subject to much debate on actual sum of the package since many organisations, including the Department of Finance says we can only afford Php300 billion in total), package that includes:
- Creating jobs for workers who lost employment as a result of COVID19, including repatriated overseas Filipino workers,
- Supporting critically-impacted businesses to ensure continued operations
- Providing assistance to MSME+ entities (including startups), self-employed individuals, and freelancers through wage subsidies, interest-free mid-term length loans, government guarantees for loans, restructuring of existing obligations, re-training of workers and re-crafting of operational processes to be more attuned to the new normal,
- Providing educational subsidy for students not currently covered by government scholarships
Provisions for businesses
1. Wage subsidies
Those who stand to benefit are freelancers and self-employed individuals. The Department of Labour and Employment (DOLE), will offer wage subsidies amounting to at least 50% to 70% of basic salary costs of non-essential businesses.
DOLE will also directly provide wage amelioration directly to freelancers, professionals, self-employed, etc. through an open-application window system - provided that the amount of wage amelioration will not be more than 75% of the applicable minimum wage and only for a maximum period of 2 months.
2. Loan extension
Banks, nonbank financial institutions, lending and financing companies are encouraged to give extension on principal payments of commercial loans of non-essential businesses (which fall due between March 16 and December 31, 2020) of up to two years maximum.
Since the draft was released however, this particular provision has received contention from banks who say that it could pose liquidity issues on financial institutions. Don’t hold your breath for this as the length may just be trimmed down.
Pro-tip: While this bill is waiting for the Senate’s concurrence and final approval from the President, if you have an outstanding loan, check with your relationship manager if your loan can be restructured based on the Bayanihan Act.
There are also sections that will facilitate faster and inexpensive business permit applications, renewals, and extensions to businesses. The section on Regulatory Relief for Business Entities ensures that some non-tax and non-duty fees and charges usually imposed on businesses could be waived. Note that only those critically impacted by COVID-19 will be able to get these charges waived. The President is stated to have the power to waive these fees for a period of one year.
The Bureau of Internal Revenues (BIR) will also be simplifying requirements during the lifecycle of businesses from registration until the closure of businesses. This will include allowing and recognising electronic receipts as proof of payment. In addition, they will remove the limitation to filing and payment of taxes in specific revenue districts offices. Government agencies beyond the BIR and including Local Government Units are encouraged to support this by reducing the number of fees, charges, and taxes charged to businesses.
If you’re registering a business for the first time or will register a new one here are the steps to get a business permit.
3. Financial interventions
Credit Mediation and Restructuring Service (CMRS) between LGUs in partnership with GoNegosyo where Negosyo centers would help MSMEs with fair and transparent loans and restructuring policies.
Loans through a Special Program Fund of SBCorp that would expand its existing loan programs for MSMEs, which will include reduced eligibility requirements, reduced interest rates, loan extension, and the like. These can supposedly be used for payroll, materials and supplies, mortgage payments, rent, utilities, etc.
Note that the Small Business Corporation (SBCorp) arm of the DTI is mandated to prioritise startups and MSMEs as well as those in the informal sector.
The Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP) will offer interest-free loans for non-essential MSMEs, agri-fishery, and startups alongside loan guarantees by the Philippine Guarantee Corporation (PGC). This will prioritize non-essential MSMEs and startups and ensure they are able to fulfill their loan obligations (existing, outstanding, and new loans) to banks, lending or financial firms.
4. Another relevant grant
Through the Department of Trade and Industry, MSMEs can now avail of technical assistance and grants in education, training, and consultancy services on topics such as innovation in business practices, upskilling and re-skilling of workers to adapt to the new nature of work, etc.
These are the most beneficial provisions for MSMEs on the bill as of late. There may be some changes before it gets passed down for approval by the President and we’ll make sure to make changes on this blog when that happens.
For now, read through on provisions that are applicable to you and your business. Before you make your next step: if it’s registering a new business or deciding to take out a loan to take on new projects or fix your cash flow problems, consider your options and schedule your activities based on the provisions of the ARISE bill.
Need business financing today? Apply for one with First Circle by clicking here.