5 Ways to Save Your Small Business from a Pandemic


Published on: May 12, 2020 Last updated: May 26, 2020

MSME Loans and Other Ways to Save Your Business from COVID-19 | Moneymax

Micro, small, and medium enterprises (MSMEs) are among the hardest-hit sectors during the COVID-19 pandemic. It’s literally a chain of unfortunate events, from temporary shutdowns and mass layoffs to depleting cash reserves.

What to do if you’re struggling to keep your business afloat in these difficult times?

From cost-cutting measures to MSME loans, here are five ways to get your business back on track during and after the COVID-19 pandemic (and any crisis in the future).

MSME Loans and Other Ways to Save Your Business from a Pandemic

1. Find Ways to Cut Costs

MSME Loans and Other Ways to Save Your Business from COVID-19 - Cut Costs

How has the pandemic affected your business? Do a financial check-up to find out the real extent of damage, so you can develop a proper recovery plan.

Review your financial statements and compare your current cash flow, sales, and profits to last year’s data. This will give you a clear idea of how much your business has gone down (or maybe up). You might realize it isn’t as bad as you expect, or you might need to ramp up your funding to get through the crisis.

Take a look at your business expenses. Knowing what you should be budgeting helps you maximize your revenues and minimize your losses. What are your most important and urgent expenses? Which costs can be reduced, deferred, negotiated, or avoided without compromising quality?

There might be certain business costs that you’re excessively spending on. For example, office rent and utilities can drain your finances. Consider using a co-working space (for when the pandemic or quarantine is over) with cheaper and flexible payment terms. Or set up a work-from-home arrangement for your employees.

If you’ve been planning to expand your business, consider putting it on hold because your priority right now is to overcome the crisis by operating on a lean budget.

2. Negotiate Your Debts and Payments

MSME Loans and Other Ways to Save Your Business from COVID-19 - Negotiate Your Debts and Payments

Reach out to your lessors, suppliers, lenders, and anyone you have to pay in the next few months. See if you can defer your payments, get a discount, or extend your grace period with them. To keep your business, they might provide you with options to help you spread out your business costs.

As for commercial rents, the Bayanihan to Heal as One Act grants a 30-day grace period to MSMEs that temporarily closed down during the enhanced community quarantine (ECQ), without interest, penalties, fees, and other charges. Under the law, lessors who refuse to provide the 30-day grace period will be fined PHP 10,000 to PHP 1 million, jailed for at least two months, or both.

Moreover, the Department of Trade and Industry’s (DTI) guidelines on commercial rents[1] suggest other arrangements to lessen the financial impact of the lockdown on MSMEs. These measures include totally or partially waiving rents due during the ECQ, offering discounted rent, and renegotiating lease contracts. You might want to bring these up when negotiating with your landlord.

If you’re negotiating with other micro and small entrepreneurs, consider that just like you, they need to keep their business afloat. Work together to come up with a win-win solution for both parties.

3. Secure Funding Through MSME Loans

MSME Loans and Other Ways to Save Your Business from COVID-19 - Secure Funding

If you’ve done the first two steps above and you’re still having cash flow problems, look for funding options such as business loans to keep your business going after the pandemic.

Tap into government programs that help MSMEs recover from the pandemic, including low-interest financing options such as MSME loans. Businesses that produce or sell food, medical supplies, and other essential goods and services will be prioritized for financial support.

MSME Loans and Other COVID-19 Financial Assistance Programs for Micro and Small Businesses in the Philippines

1. Pondo sa Pagbabago at Pag-asenso (P3)

  • Who can apply: Microenterprises operating for at least one year with asset size of up to PHP 3 million
  • Loan amount: PHP 5,000 to PHP 200,000
  • Interest rate: Up to 1.5% per month

How to Apply for a P3 Loan[2]

Submit the following requirements to the nearest partner microfinance institution (MFI) or credit delivery partner of Small Business Corporation (SB Corp):

2. COVID-19 P3 Enterprise Rehabilitation Fund (ERF)

  • Who can apply: Micro and small businesses operating for at least one year before March 2020 and have suffered a loss or drastic reduction in sales during the pandemic
  • Loan amount:
    • PHP 10,000 to PHP 200,000 for micro-businesses with asset size of up to PHP 3 million
    • Up to PHP 500,000 for small businesses with asset size not greater than PHP 10 million
  • Interest rate: 0.5% per month (6% per annum)

How to Apply for a COVID-19 P3 ERF Loan[3]

A Barangay Clearance and an LGU certification of business establishment are required for borrowers applying for this MSME loan. No guidelines have been released yet on the P3 ERF loan application. Negosyo Centers nationwide will start accepting applications after the lifting of the ECQ.

Get a personal loan from Moneymax!

3. LANDBANK I-RESCUE Lending Program

  • Who can apply: Small and medium enterprises, microfinance institutions, and cooperatives
  • Loan amount: 85% of needed investment
  • Interest rate: 5% per annum
  • Loan term: Up to five years, with two-year grace period on the principal payment

How to Apply for an I-RESCUE Loan[4]

Submit the following requirements to LANDBANK:

  • Accomplished loan application form
  • SEC/DTI registration papers
  • Notarized certificate confirming the resolution of the Board of Directors authorizing the application for LANDBANK loans
  • Valid certificates/permits/licenses/clearances from concerned government agencies
  • Audited financial statements for the current year and the last three years
  • Valid government-issued ID
  • Tax Identification Number (TIN)

Related: Business Loans for Startups in the Philippines

4. Livelihood Seeding Program/Negosyo Serbisyo sa Barangay

  • Who can apply: Micro entrepreneurs affected by the COVID-19 pandemic
  • Benefits:
    • PHP 5,000 to PHP 8,000 financial assistance
    • Enterprise development training
    • Business counseling/mentoring

How to Apply for the Livelihood Seeding Program[5]

Go to your barangay/city/municipal hall to express your interest and inquire about how to join the program. You may send an inquiry to bsmed@dti.gov.ph.

5. DOLE Integrated Livelihood/Kabuhayan Program

  • Who can apply: Vulnerable and marginalized groups (senior citizens, PWDs, solo parents, etc.) whose means of livelihood has been affected by the pandemic
  • Benefits:
    • Financial assistance of up to PHP 15,000 for growing and existing businesses or up to PHP 10,000 for rebuilding a business suffering from reduced profit due to the COVID-19 crisis
    • PhilHealth, SSS, or micro-insurance contribution for the first three months
    • Technical assistance on growing the business

How to Apply for the Kabuhayan Program

Submit a Kabuhayan application form, business financial plan, or project proposal to any DOLE-accredited co-partner in your area.

Related: Unemployment Benefits and Other COVID-19 Government Assistance Schemes

4. Join Online Forums for SMEs

MSME Loans and Other Ways to Save Your Business from COVID-19 - Join Online Forums

Take advantage of free online learning resources for entrepreneurs during your downtime. By attending online discussions on business issues and solutions, you can pick up lessons and best practices for surviving the COVID-19 crisis.

Non-profit organizations such as Go Negosyo and Association of Filipino Franchisers Inc. (AFFI) have been conducting online forums, podcasts, and mentoring sessions that tackle different concerns that MSMEs face during the lockdown.

Check out the topics and schedules for online live sessions at their respective Facebook pages[6].

5. Go Digital

MSME Loans and Other Ways to Save Your Business from COVID-19 - Go Digital

Your customers are staying at home and glued to their mobile devices most of the time. This could be what the new normal might look like post-lockdown.

Think of creative ways to adapt to changing market trends. What can you do to provide value to your customers during and after the pandemic?

Offer your product or service online. Turn your brick-and-mortar store into an online business. You can accept orders online through social media or e-commerce platforms. If you’re selling a service (e.g., tutoring, yoga classes, etc.), you can bring it to your clients through video conferencing apps like Skype or Zoom.

Take inspiration from a mom who added an online delivery service to her in-law’s bakery, and now earning up PHP 7,000 daily during the ECQ[7].

Related: Make Money Online: How to be a Shopee or Lazada Online Seller

Final Thoughts

Filipinos are known for being resilient, and entrepreneurs are no exception. You can get through this crisis through thorough planning and with help from MSME loans. Always remember to take quick action and stay calm.

Get the right loan for you!


Written By:

Venus is an experienced personal finance writer with a background in digital marketing, public relations, and journalism. She's into stock, VUL, and mutual fund investing. Follow Venus on LinkedIn.