The Small Business Corp. (SBC), the micro-financing arm of the Department of Trade and Industry (DTI), will allot P1 billion next year for a loan program that provides micro, small and medium enterprises (MSMEs) with an alternative source of funds.
“The President has vowed to provide affordable micro loans for micro entrepreneurs, and we are here to deliver this promise through the Pondo sa Pagbabago at Pag-asenso (P3),” DTI-Regional Operations Group Undersecretary Zenaida Maglaya said.
The P3 program aims to give these enterprises better access to financing, reduce their borrowing costs, and fight the loan sharks preying on them. It prioritizes the Philippines’ 30 poorest provinces.
Launched nationwide in April, P3 has P850 million as initial funding.
Through P3, entrepreneurs can avoid “overly expensive borrowings” and apply for affordable loans to expand their businesses, Maglaya said.
As of November 24, P3 helped 16,210 entrepreneurs, with four national microfinance institutions (MFIs) and 90 local conduits assisting in delivering loans, while 45 MFIs are in the pipeline.
A total of P485.41 million has been released to partner-conduits and P307.80 million to microfinance borrowers.
Besides providing another source of funding, P3 is seen to help stabilize the supply and cost of commodities in public markets, encourage entrepreneurs to grow their businesses, and offer employment and generate income for Filipinos.
The P1 billion fund from the Office of the President will be coursed through SBC, which will accredit partner-institutions, such as non-bank MFIs, cooperatives and associations to serve as conduits for the money.
“We’re very grateful that this program [is now a reality], so we can help micro entrepreneurs at the bottom of the pyramid and create an entrepreneurial environment in the countryside that will also generate jobs for Filipinos,” Maglaya said.
Primary beneficiaries are those with no easy access to credit, including market vendors, agri-businessmen, and members of cooperatives and industry associations.
An entrepreneur can borrow between P5,000 and P100,000, depending on his needs and repayment capacity with no collateral requirement.
P3 only requires minimal documentation; takes one day to process an application; has a monthly interest rate of 2.5 percent; and collects repayments either daily or weekly.