Sink or Swim: An MSME Story

The pandemic continues to jolt businesses with the unthinkable. If this health crisis lingers until the end of 2021, more MSMEs will sink and only a lucky handful—with more buffer funds to burn—will swim safely through it

My folks eagerly went back to our retail clothing stores they had sorely missed for nearly three months. The strict lockdown since March 16 due to the COVID-19 pandemic had been eased in June in many Philippine provinces. It was such a relief for seniors like them who had gotten used to the daily grind. 

For several days in the first weeks, however, I noticed they would come home in a drag. Their faces were in disbelief and their shoulders slumped. I knew instantly what it was, although I had hoped I was dead wrong. 

“Wala (None). Zero,” they answered the first time I had asked about the sales. It was an unbelievably zero in our books—a first since our beloved late aunt and matriarch, Julita Sandoval, founded the very first store in the early 1960s. Fondly known as Auntie Julie, she died in November 2017. She was 82. 

Other times my folks wouldn’t even say a word when asked. They would merely shake their heads and hands in unison, a language perhaps less damning to use. Some days it was another store of ours that would take home nothing. The rest would have as little as less than a hundred to as fairly decent as a thousand pesos on extremely rare occasions. Doing business now is no longer a question of which store goes home with zero, but of when—and until when. 

San Fernando City Shopping Mall has been undergoing renovation before the pandemic struck. Many businesses there now are struggling to keep their stores afloat. Source: City Government of San Fernando, La Union Facebook page

Looking back at the same time last year, we were extremely busy at our small clothing stores at the San Fernando City Shopping Mall—also known as old or dry market—in La Union at the north of Manila. June was the opening of classes in most schools; it was the peak season for many businesses there lasting until August. Parents would flock to the stores to buy school uniforms, bags, and shoes for their children, or college students would buy for themselves. 

Now other fellow store owners at the mall, especially those selling non-essential items, have similar sales-deprived days. My relatives who have stores of their own there have seen their income dwindle. To get by, they have started selling farm harvests, food products, and other pandemic essentials online, such as masks, face shields, or have shifted to offering delivery/errand services or “pasabuy” to earn a little extra on the side. I get their point: at least survive, if you cannot thrive at this time.  

We are not alone; that is definite but not at all comforting. Even the popular surf town of San Juan in the province, which had its heyday before the pandemic, has turned into a “ghost town” according to some locals. 

When President Rodrigo Duterte ordered Boracay, a world-renowned beach destination, to close from late April to October 2018 for a beach clean-up due to environmental violations by commercial establishments there, San Juan got a chunk of its tourists. Urbanites hungry for a slice of the beach life and party at the same time would swing by especially on weekends and holidays. These elements—and the fact that heading north is way cheaper through a bus ride or a private car from Manila—made the surf town a hit for tourists.

Before becoming one of the top summer destinations in the country, San Juan was once a sleepy surfing town up north. Little of it was known to many. Tanned-skin surfers with salty hair and rock-hard abdomen would glide on their boards, stoked and unbothered. Several resorts and restaurants can be found here and there. Regardless, the place was under the radar—less popular than other surfing destinations like Baler in Luzon and Siargao in Mindanao.

Now it has morphed into another Boracay sans the white sand. Business establishments have sprouted like seedlings in what was once just a swath of untilled lands. Residents have turned their front yard into mom-and-pop stores, restaurants, coffee shops, and whatnot. Others have their lots rented out to others. Wealthier businesspeople have sunk their fingers into this new investment treasure, hoping to find another pot of gold.

Daytime would have you staring at people in diverse groups, walking by the road as they find food. They would oftentimes look like they just jumped off the bed, hungry and groggy. At night the sound of music throbs like the heartbeat of a woman drunk in love for the very first time.

Without a doubt, San Juan was their spot of earthly heaven in a country of 7,100 islands. It was an escape from the hustle and bustle of urban life.

San Juan has been dubbed as the “Surfing Capital of the North.” Photo by Jeremy Caisip/La Union Surfing Break Facebook Page

March to May–unfortunately the height of the strict lockdown–would have been among the busiest times in San Juan. Accommodations and restaurants would burst at the seams so to speak, even more so during its annual surfing break by end of October. Tourists would come in bus- or vanloads from Manila or farthest down South of it.

I heard from friends that a few establishments even had made necessary preparations for the coming summer, which unfortunately turned into a pandemic-struck one. They extended structures to accommodate more rooms or more tables and chairs, understandably for good business reasons. But most of the time now, either it is half-filled or plain empty.

Some establishments there have temporarily closed shop even after the lockdown, leaving employees without work. Others have soldiered on, seemingly business as usual—but it’s entirely not. 

MSME 2018 statistics

Since our family-owned stores have been managed largely by traditional business-minded folks, and so far luckily to have survived nearly six decades before the pandemic, adapting to new ways of doing business was not on their agenda. No wonder MSMEs like ours—whose products are non-essentials in a public health crisis—that have stood the many tests of time with the same old business tricks are among those in peril now. 

On July 26, a Manila Bulletin report quoted Secretary Ramon M. Lopez of the Department of Trade and Industry (DTI) as saying that 25.9% of businesses have temporarily and permanently shut down. Partially operational businesses remain at 52% while those fully operational at 22.1%. These numbers were based on a DTI survey of 2,135 companies from June 4 to 17 evaluating the status of businesses in the country in the middle of the continued quarantine measures. 

Meanwhile, Philippine Daily Inquirer reported in May that the government expected about Php2.2 trillion losses in our economy this year, considering that companies have lost months of profits and employees have lost both income and jobs. 

Before the pandemic though, a total of 1,003,111 business enterprises have been operating in the country based on the Philippine Statistics Authority’s (PSA) 2018 List of Establishments. Of this, the MSMEs accounted for 99.52% or 998,342 establishments. Large enterprises accounted for only 0.48% or 4,769. 

Of the total MSMEs, the micro-enterprises cover 88.45% or 887,272, while small and medium enterprises are at 10.58% or 106,175 and 0.49% or 4,895 respectively. 

The MSMEs produced 5,714,262 jobs or 63.19% of the total employment in the country, of which the micro-enterprises generated the biggest share at 28.86% and small enterprises followed suit at 27.04%. The medium enterprises accounted for only 7.29% of jobs. The large enterprises, meanwhile, brought to the table 36.81% or 3,328,801 of the country’s total employment. 

The category of an enterprise in the country is based on asset size and employment size. A micro-enterprise has an asset size of up to Php3M and one to nine employees. A small enterprise has an asset of Php3,000,001 to Php15M and 10 to 99 employees. A medium one has Php15,000,001 to Php100M in assets and 100-199 employees. The type of business ownership, whether single proprietorship, cooperative, partnership, or corporation, does not affect these categories, however. 

What MSMEs need now 

When I had kept in touch with friends and relatives with businesses or with those who work at MSMEs, I discovered that the dilemma is the same: sales are deteriorating while bills are piling up. These people are engaged in the wholesale and retail trade, food service, call center, accommodation, and health and wellness. 

These business owners are at a loss on how to  recover and move forward when consumer spending has been low since the health crisis started. For instance, the demand for clothing products has been at its lowest in decades. Only those who have enough savings spend on these and other non-essentials. Unfortunately, our primary market at the stores is the middle- and low-income households largely cash-strapped by the pandemic. 

In my conversations with friends and relatives, the deep strain in their voices was apparent. Their continued suffering was evident in their text messages as well.

I asked them if they would like to share some of the things they’ve been going through. Below are the insights and suggestions I gathered from them, as well as from the interview with Ferangeli Guitar Handcrafter in Cebu.  

1. Expand government loan programs 

For one, restarting the business after the long lockdown with little to no more buffer funds left is the primary setback for MSMEs. 

Micro and small enterprises, in particular, have a notorious predisposition to loan sharks that impose 10% to 20% interest rates on the principal loan amount. As it turns out, some MSMEs aren’t aware of more reasonable loan programs offered by government financial institutions. 

In other cases, however, the number of documentary requirements and the long, tedious process of applying to the public financial sector also discourage them. This situation is another reason they opt, especially when they need it the most, for private lending companies that can quickly approve loans in a day or two, regardless of high-interest rates.

Upon learning of Small Business Corporation’s (SBC) COVID-19 Assistance to Restart Enterprises (CARES) program, a few of them in fact have applied already. They said the program is good but should be augmented to assist more MSMEs at this time and into the new normal. Others have remained clueless about the program, but have expressed their intent to apply. 

SBC is a government financial institution that assists the DTI in providing loans to MSMEs amid the pandemic.

The CARES program offers zero interest but deducts 6% to 8% service fees depending on the terms of repayment. Micro and small enterprises can borrow from Php10,000 to Php500,000. The loan amount is payable in 18 to 30 months with a grace period of three to six months from the time the loan is released. 

The lowdown, though, is that the business should have been running for at least one year before the lockdown in March. Plus, it takes a while to get feedback from SBC understandably because of the number of applications it has received.


As posted on its website, SBC has reopened its CARES 2 program on August 17 to accommodate more MSMEs. Augmenting this program or introducing a similar program that may last beyond the pandemic would greatly help those who want to free themselves off the shackles of loan sharks and would be able to assist more enterprises in surviving the pandemic and in keeping jobs.

2. Make allowances for business dues, taxes, and other government fees

As soon as the businesses reopened, bills accumulated one after the other, such as electricity billing, income taxes, employees’ benefits, city licensing permits, stall fees, and space rentals, among others. Not to forget, home bills as well.

Fernando Dagoc Jr. of the family-owned Ferangeli Guitar Handcrafter in Lapu Lapu City, Cebu, said it would help if the government could make the remaining months of 2020 something like a grace period or a void year in terms of paying loans, and allow entrepreneurs to pay the following year.

Ferangeli Guitar Handcrafter store in Lapu-Lapu City, Cebu, has been in business since 1919. Source:

A friend of mine, one of the many accommodation owners who have taken a leap in San Juan’s thriving tourism industry, also lamented that a two-month moratorium on bank loan isn’t enough. “Wala pang 5% sa dating kinikita [ang income ngayon]. Tapos bawal pa ang mga taga ibang lugar pumunta sa San Juan. Region 1 residents lang ang pwede (What we make now isn’t even 5% of what we used to make. Those who aren’t from Region I cannot even come to San Juan. They only allow Region 1 residents here),” Ariel Manzano, owner of Northwing Apartelle in San Juan, La Union, said in a text message on July 24. He’s worried about how he could continue to pay off his bank loan with the current situation.

Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas, however, said that a one-year freeze on loan repayments could bring more harm to the banking industry, the financial sector, and the Philippine economy, according to a CNN Philippines report on August 13. 

The high shipping cost now is another cause of concern, according to Dagoc Jr., as it affects the salability of his products. “If we do airport to airport shipping noon, the rate was about P20 per kilo, ngayon P55 per kilo. Pero iba pa ‘yung [rate sa] dimensions. Since wala ng passengers, doon na sila bumabawi (When we used to do shipping by air, the rate was about P20 per kilo. Now it is at P55 per kilo. And then there’s also the rate per dimension. Since there are no passengers, they are able to recoup this way),” he said.  “We understand that as a business, but ‘yun nga. Nagsu-supply kami sa (We’re supplying to) other provinces, like Davao, ng (of) ukulele. But ‘yung (the) shipping would add up. So it would be less salable. But in this pandemic people are on a tight budget. I don’t know how the government could address that.”

Other sources have expressed their grievances on tax payments, licensing permit fees, and other government obligations. They hope the government could lessen the required tax payments or provide discounted rates, considering they’ve been out of business for months and sales haven’t picked up yet.   

They said it is too difficult to settle all financial obligations at the same time when their savings have been pulled likewise to pay for home bills. But reducing government fees to a far more reasonable amount or giving a longer grace period or moratorium to pay bank loans and other dues given the current situation would ease their burden a lot. Otherwise, their businesses would eventually collapse in just a matter of time, they said. 

3. Online selling platforms to support local products and services

With the rise of online selling platforms like Lazada and Shopee, Dagoc Jr. said local products have gained stiff competitors, especially from countries like China. Although he understands that some sellers of imported products are Filipinos themselves, he said it would have been more helpful if these platforms push for local products and services instead. But it would be a “hard decision” for these online platforms, he admitted. “So maapektuhan din sila (online sellers of imported products). Sila na din ‘yung walang makakain. It’s not a win-win situation (So they (online sellers of imported products) will also be affected. They will also find themselves without food),” he said.


The DTI campaigned for “Buy Local, Go Local” soon as the economy reopened. This campaign was supported by various private institutions.

“Sometimes people don’t see that we have better local products than elsewhere,” Dagoc said. 

Businesses also need to adapt to technology and go online. “The world is not going back to the ‘90s where you transact through telephones,” said Dagoc Jr whose family business has been operating since 1919. He said that people have become “lazier” now, preferring online shopping. “The pandemic of course made it worse because of limited movement outside,” he added. 

Although acknowledging that their sales were “not as big as before because of the loss of walk-ins,” Dagoc Jr. said the pandemic encouraged people to learn how to play a musical instrument, thus the demand through online orders. “Malaking tulong ‘yung online. It was a good thing for us na (that) we started early. Madali na kaming makita (We could easily be seen),” he further said. It’s the souvenir section of their store however that has been hitting zero days because of its dependency on walk-ins and tourists. 

4. Boost information drive to reach out to MSMEs 

There’s a need for Philippine government institutions to boost their information drive to reach out to MSMEs in raising awareness about their financial programs, business development trainings, and other initiatives. 

One of the things I discovered is that many MSMEs aren’t aware of government programs and how institutions like the DTI could assist in business development, either in operations, accounting, or marketing. These institutions indeed promote through social media platforms, but several micro and small businesses specifically are still hardly online or, worse, not online at all. 

I recall though that the DTI in La Union reached out to me through text and email last year when we used to have a small restaurant. The summer business program offered to me was very interesting and would be beneficial to managing our business. It was just untimely that I couldn’t attend because I had a prior work commitment overseas. Given the chance again, I would gladly take the opportunity. Perhaps others would be willing to obtain training of this kind if they would be made aware or offered.

If MSMEs aren’t accessible through social media or mobile communication, perhaps one possible information dissemination approach is to reach out to different MSME associations, say, market vendors association. In turn, these groups would relay the information to their members—yes, the grassroots approach. It may sound like additional work, but it would help struggling MSMEs, more so in these dire times.

Sink or swim

Halfway through August, the pandemic continues to jolt us with the unthinkable — a picture of a thousand business fears. Yes, we would still have our zero days in a week. We have learned to live with the uncertainty, but at the same time do things differently now. In fact, we are slowly shifting to online selling as well. 

This post-lockdown situation would, however, distress my other aunt, Wilhelmina, 75. Many times I would catch her just staring blankly into space. No amount of positive words could change her perception of how differently the world unfolds now before her weary eyes. She would momentarily believe and hold on to hope; but being at the city mall six days a week, the truth comes out. My parents, meanwhile, have accepted the current state of our business. Still, there’s no stopping them from going to work. It makes me wonder how other business owners are coping, too—or if they are at all.

This battle at hand, among the ones my folks had lived through in business, is largely different on many fronts. It is, by far, the hardest, especially without Auntie Julie who always had the best business sense.

Auntie Julie lived a full life helping her family and other people. Photo by Lorela U. Sandoval

As a person and businesswoman, Auntie Julie was not the type who would fall into false positivity. She was more of a realist who would recognize the problem at hand. She was frank and not one to mince words. 

I remember her saying that one of the ingredients of a successful business is maintaining a good credit standing with your suppliers and creditors. Pay what you owe them and you will reap the rewards of their continued trust, she would say. Besides, it’s good karma, she would punctuate her advice. 

She instilled in me the importance of saving money for hard times that could come. At best, she always had a deep sense of faith in and relationship with God, and frequently donated to churches. 

She was contented with what she had—a roof over her head and a small business to bring food to the table. She lived way below her means, except when she had our house built and on a few occasions when we had insisted she enjoy the fruits of her labor. But she would help more people in the course of her life: sent several children to school, gave school allowances, and lent money to people in need. She wanted to be a doctor, but only finished elementary level; so she would always remind us of the importance of education. 

It was the hard life she had growing up that drove her to a simple lifestyle. She couldn’t forget the time they had to beg for rice from relatives just so they could have a meal. Having experienced poverty since my grandfather died when she was only four years old and my father was an infant, she vowed to herself never to go hungry and poor again. She succeeded: her business has remained steady—albeit small—in decades past. She was contented at this achievement. 

She wanted me to be like her or perhaps the contemporary version—an entrepreneur; but I told her it was beyond me. She asked me to find time to learn the ropes of the family business; I asked her to allow me to spend the other time writing and taking field work. It was like a tug-of-war for years, meeting halfway in the end. She was a powerful figure in my life, so saying no to a woman I owe much of our life to is out of the question.

She was one of the reasons this NewsNarratives website had been founded. She gave me the initial capital to pull it through; a few friends who believe in our cause also contributed in the past. In my mind, so many people in the world are making a difference in the lives of others and their stories ought to be written, read, and learned from. 

Auntie Julie is without a doubt one of them, hence partly this tribute to a wonderful woman and a brilliant businesswoman.

I think about her on some anxiety-laden nights and what she would do if she was still around. Would she ride this out or temporarily close any of our non-performing stores, or would she fight the tide head-on? 

Businesses—in all categories and capacities—are on this same, dilapidated boat. We soldier on despite the hurdles. But let’s face it, if this health crisis lingers in the country until the end of 2021, more MSMEs will sink and only a lucky handful—with more buffer funds to burn—will swim safely through it. 

Lorela U. Sandoval is a freelance journalist who has contributed reports to various media outlets in the Philippines and overseas. She now primarily writes safety- and security-related stories. Also, she assists foreign media colleagues wanting to cover stories from the Philippines in terms of logistics, securing interview, and translation. You may further check out her profile at

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