State-owned Small Business Corp. has extended P5.1 billion worth of loans this year under a program designed to cater to small businesses who would have otherwise clung on to loan sharks to make ends meet.
As of this year, more than 110,000 microentrepreneurs across the country had borrowed money from the microfinancing arm of the Department of Trade and Industry (DTI) , which was then used to help their businesses grow.
The DTI calls this the P3 program, which stands for Pondo sa Pagbabago at Pag-asenso. It is intended to give microenterprises better access to finance, while providing them an alternative to informal lending popularly known as “5-6.”
“The P3 program was created so that even the smallest of entrepreneurs, like the sari-sari stores owners and market vendors, will have an opportunity to grow their business without the usurious 5-6 loans,” Trade Secretary Ramon Lopez said.
“I encourage all entrepreneurs in need of capital to avail themselves of the P3 program through the DTI Negosyo Centers and accredited credit delivery partners,” he added.
Since its launch in 2017, the program has been making available to microentrepreneurs loans worth P5,000 to P200,000, which would be issued depending on their business need and repayment capacity with no collateral requirement.
Interest rate and service fees, all in, do not exceed 2.5 percent every month, the DTI said, which is a lot more affordable than the interest rates charged by loan sharks.
According to the DTI, the “5-6” money lenders charge a 20-percent nominal interest rate on loans to micro, small, and medium-sized enterprises. —Roy Stephen C. Canivel