The Duterte administration has earmarked P19 billion for a program that will address the financing requirements of micro and small businesses over the next five years.
Through Pondo sa Pagbabago at Pag-asenso (P3), the government will make financing more accessible to small enterprises, particularly those in the poorest provinces.
“The P3 is designed to bring down the interest rate at which microfinance is made available to micro enterprises,” Trade Secretary Ramon M. Lopez said in a statement Monday.
According to Lopez, the P3 was set up to fulfill President Duterte’s directive to replace the so-called “5-6” system, where money is easily borrowed from loan sharks but at an interest rate of 20 percent per cycle.
A pilot test of the P3 will be rolled out this month, covering Mindoro, Sarangani and Leyte, which are among the 30 poorest provinces.
An initial P1 billion was included in the 2017 General Appropriations Act and will be managed by Small Business Corp., the financing arm of the Department of Trade and Industry.
“Fund delivery to microenterprises shall be carried out either by wholesale lending to non-bank financial institutions like microfinance institutions (MFIs) and cooperatives, which shall on-lend the fund to beneficiaries, or by direct lending by SB Corp,” Lopez explained.
Loans will range from a low of P5,000 to a high of P300,000, which will be charged an interest rate of a maximum 26 percent per year.
No collateral will be required.
Among the priority borrowers are small enterprises in priority and emerging industries, start-up businesses and the technology innovators.