The Department of Budget and Management (DBM) said about P2 billion in loans will be provided by the Credit Support Fund for 416,000 microentrepreneurs residing in communities affected by Super Typhoon Yolanda.
In a statement on Wednesday, the DBM said that through the Credit Support Fund, the loans will bear low interest rates for various livelihood activities, such as convenience stores, livestock, hog, cattle and goat raising, piggery, fisheries, poultry, and farming.
The P2-billion Credit Support Fund—released to and charged against the Bureau of Treasury’s (BTr) Special Account in the General Fund—will be transferred to the Land Bank of the Philippines (LBP) under its Calamity Rehabilitation Support (CARES) Program.
The funds will then be lent to microfinance institutions (MFIs) which specialize in financing livelihood programs with only a 4.5-percent interest rate, the DBM added.
Of the total P2 billion release, 50 percent or P1 billion will be provided to MFIs which will be re-lent to microenterprises.
The other 30 percent or P600 million will serve as a credit guarantee to the end-borrower or the microentrepreneur, while the remaining 20 percent or P400 million will be provided to microfinance conduits as operational support, it added.
The eligible MFIs that will carry out the program include rural, cooperative, and thrift banks; cooperatives, and non-government organizations. Governing and management committees composed of representatives from Department of Finance (DoF), BTr, DBM, LBP, MFIs, and the private sector, will ensure the efficient and effective implementation of the program.
“By tapping MFIs, we are not only speeding up the delivery of much-needed livelihood assistance to the affected communities. We are also strategically investing in inclusive social structures that empower our poor countrymen through direct, immediate and substantial access to capital,” Budget and Management Secretary Florencio Abad said.
Abad said that the P2 billion financial aid complements ongoing reconstruction and rehabilitation activities in areas ravaged by the super typhoon.
“The Credit Support Fund is designed to help communities not only to get back on their feet but also to make their lives even better than before the calamity struck. By financing livelihood projects and supporting micro-entrepreneurs, “we are rejuvenating local economies in a way that enables these to achieve inclusive growth,” he added.
Abad said that the Aquino Administration is committed to building back better communities ravaged by Yolanda and other calamities. Alongside the reconstruction of destroyed roads and public facilities, the government is also working to restore livelihood and incomes lost.