Exporters in the Philippines that can demonstrate trading history by producing letters of credit (L/Cs) or purchase orders can apply for interest-free government loans to meet their shipping freight costs.

The support for exporters is offered by SB Corp, the Philippine's state agency established to provide a wide range of financial services, specifically for small- and medium-sized enterprises (SMEs).

Pandemic recovery

SB Corp's scheme applies to SMEs with at least one-year experience in export transactions and has been made available to help them survive the impacts of the coronavirus pandemic.

The scheme is essentially a government-backed quick-response fund from which exporters may draw money to pay freight costs once a booking has been made with a shipping line according to head of financing at SB Corp, Lourdes Rosario Baula."The increase in freight rates and cost of raw materials resulted in the increase of total production cost. In this scenario, local exporters have to compromise their profit margin to meet export sales targets and to keep their businesses afloat," she said.

Eligibility criteria

Eligible borrowers are SMEs with assets of the equivalent between around US$60,000 and US$2 million.

Businesses must have been exporting for at least one year and be able to show at least three export L/Cs or purchase orders.

Loans of up to 20 per cent of the L/C or purchase order value will be available up to a limit of 15 per cent of sales as declared to the tax authorities in financial statements for 2019 and 2020.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.