Bayanihan 2 Explained

Articles
August 17, 2020

Last Updated: September 14, 2020

A bicameral conference committee comprising members of both the House of Representatives and the Senate are expected to jointly tackle SB 1564 and HB 6953 in mid-August, two months after the Philippines’ first COVID-19 specific legislation expired.

Dubbed as the “Bayanihan to Recover as One” or simply “Bayanihan 2” bill, SB 1654 and HB6953 are designed to provide comprehensive economic relief measures as a follow-up to Republic Act No. 11469, otherwise known as the Bayanihan to Heal as One Act or “Bayanihan 1”.  

Bayanihan 1 was signed into law in March 2020, when the government first declared lockdown in the National Capital Region and other populous areas across the country in an effort to contain the spread of COVID-19. The law lapsed in late June 2020.

Consequently, some of the relief packages available under Bayanihan 1 lost their legal grounding and had to be discontinued, including the following:

  • Additional social amelioration program for low- to middle-income families administered by the Department ofSocial Welfare and Development’s (DSWD) and local government units
  • Livelihood assistance under theDepartment of Labor and Employment (DOLE) and Social Services System (SSS)
  • Low-interest and flexible-payment loans to the micro, small, and medium enterprises sector, supervised by the Small Business Corporation (SBC) arm of the Department of Trade and Industry (DTI)
  • Mandatory payment extension on loans falling due during the Enhanced Community Quarantine (ECQ) as enforced by the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP)

Bayanihan 2 Provisions for SMEs

What we know now

The full economic impact of the business slowdown over the past few months is still unclear, but lawmakers hope that the PHP 140 billion economic stimulus that will be unleashed under Bayanihan 2 can help address the gap left by Bayanihan 1.  

As we await the passage of Bayanihan 2, here is a rundown of some salient provisions from Senate and House versions of the bill, as approved separately on third reading:

On loan payment extensions

Business owners who have outstanding loans will be happy to hear that Bayanihan 2 still includes a provision on loan payment extension, which takes effect if their business location is placed under community quarantine.

Unlike Bayanihan 1 which provides a mandatory 30-day payment extension (twice extended in step with the two extensions of ECQ), Bayanihan 2 expressly provides that the number of days of payment extension will be equivalent to the number of days of the community quarantine. This means that the maturity date of the loan will be automatically pushed back.

As recommended by the BSP, the loan extension stands at 60 days. The 60-day grace period on loans is expected to take effect 15 days after publication of the law or sometime next month, according to the BSP.

Of course, borrowers and lenders can still agree on alternative payment arrangements that work for them both.

Very specifically:

  • For loans due on or before December 31, 2020 - installments, no interest on interest, penalties and other charges until December 31, 2020 or date agreed upon by the lender and borrower.

Generally speaking, loans with longer terms may seem attractive at first but they also tend to be more expensive. Some types of loans might come with high monthly interest, such that extending principal payments for one whole year while still making monthly interest payments will be much more disadvantageous to the borrower. A prolonged unpaid debt may also affect the borrower’s credit worthiness, or its ability to secure further financing in the future.

Borrowers are therefore advised to carefully review their cashflow under the new normal and not automatically choose a longer payment term. Talking to your account manager can also help you weigh all options available to you and help you pick the most sensible payment schedule. 

On loans to MSMEs and other industries

Bayanihan 2 tasks the SBC alongside the Land Bank of the Philippines to allocate a fund of Php 30 billion for low-interest loans to industries hit hard by the COVID-19 pandemic, including MSMEs, air, land, and sea transportation, retail trade, accommodation and tourism services.

Lenders from the private sector are also offering credit products that are more tailor-fit for the new economic normal. Make sure to review the terms of your loan offer to understand exactly how much you need to pay back.

If you are still looking for financial assistance, sign-up with First Circle and speak to one of our account managers to help you out.

On utility bills

A minimum 30-day grace period counted from the due date falling within the community quarantine, will be given to residential users of electric, water, telecommunications, and similar utilities. The total bill (which will not incur interest, penalties, or additional charges during the grace period) may be paid in installments over the course of at least three (3) months. Utility providers are also encouraged to offer less burdensome terms of payment for their customers.

  • In places under ECQ or MECQ: 3 months installment. No interest, penalties and other charges with the period of community quarantine

On rent payments

Residential lessees and businesses that cease operations as a result of a declared community quarantine are given a 30-day grace period from the lifting of quarantine within which to pay rents falling due during the quarantine. The total may be paid on staggered basis up to 31 December 2020. Rental rates may not be increased during this period.  

There shall be no rent increase during community quarantine.

On cash assistance

For those who received the Php5,000-8,000 cash benefit under Bayanihan 1, the DSWD and the Department of Labor and Employment (DOLE) are tasked under Bayanihan 2 to provide further cash or non cash assistance to those who have no livelihood, under an expanded Pantawid sa Pamilyang Pilipino Program or 4Ps.

Last hurdle in Congress

Once our lawmakers agree on the final form of Bayanihan 2 bill, it will be forwarded to the President for his signature and, if signed, published before it becomes a fully-fledged law.

UPDATE: President Duterte has signed the bill into law last September 11, 2020. It is hoped that the infusion of the PHP 65.5 billion earmarked under Bayanihan 2 bill will put the Philippine economy on the track to recovery.

Looking for more information on the Bayanihan Act? Check out the First Circle Bayanihan FAQ.

Some notes on the new lockdown implications for September

For those who have establishments in Metro Manila where GCQ has been implemented until September 30, drive-in cinemas and personal grooming services will be allowed to operate at 30% capacity, while the Department of Trade and Industry (DTI) is still set to craft specific guidelines for gyms and internet cafes regarding the capacity rate at which they can operate.

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