Small Business (SB) Corp., an attached agency of the Department of Trade and Industry (DTI), will offer zero-percent interest loans to entrepreneurs displaced by the recent siege in Marawi City, Lanao del Sur province.
In a statement on Thursday, DTI said the loans would be available from early December to April 2018 as part of the government’s rehabilitation efforts in the city.
“The recent events in Marawi raised the need to generate several programs that will aid in the rehabilitation of Marawi and [offer]full assistance to [the]affected residents. In support of government-wide efforts to help the people of Marawi, we will be working closely with our Maranao [brothers and sisters]to ensure they have access to the needed funds to get their businesses back on their feet,” Trade Secretary Ramon Lopez said.
“After the interest-free loan, we shall extend the Pondo sa Pagbabago at Pag-asesnso (P3) Program, which is also the microfinance program implemented by the SB Corp.,” he added.
For microfinance institutions (MFIs) that want to start lending, the P3 Program will provide credit-risk support in exchange for their timely and quick response.
A DTI-SB Corp. team has been assigned to DTI-Marawi to set up the P3 Program facility, which will also be supported by DTI-Cagayan de Oro.
To date, SB Corp., with the support of DTI’s regional and provincial offices, has accredited 94 MFIs so far, with another 45 in the works.
The P3 Program is now implemented in most provinces, with close to 40,000 borrowers to date.
Most of the MFIs that signed up are cooperatives, including self-help people’s organizations familiar with the needs of their members in growing their businesses.
Several large MFIs, including the Center for Agriculture and Rural Development (CARD), have expressed support for the program for its timely scale-up, even in remote areas of the country.
“We laud SB Corp.’s untiring efforts to link up with finance institutions across the country to ensure conduits are in place for the P3 Program. We have the funds, and we now have the channels to help our MSMEs [micro, small and medium enterprises] expand,” Lopez said.
For 2018, the government will add another P1 billion to the P3 Program’s fund to support more entrepreneurs in grow their businesses.
SB Corp. will be accrediting least five MFIs per province in the coming years to ensure that microenterprises will have easy and reliable access to reasonably priced credit in their respective locality, with 400 grassroots conduits targeted.
The agency will also support these MFIs by training them on capacity-building.
Through the P3 Program, the government hopes to encourage communities to organize themselves into cooperatives or other self-help units engaged in entrepreneurship.
DTI also invited the rural banking sector to support the P3 Program, saying that rural lenders make a potent force for scaling up the P3 Program and for improving the fund-channeling system, so that the fund reaches micro enterprises quicker.
Launched in April, the P3 Program supports micro entrepreneurs in the country with an initial funding of P850 million via lower-cost loans.
The program aims to help people in micro enterprises and those vulnerable to usurious lenders.
Under the program, a micro enterprise can borrow between P5,000 and P100,000, depending on its business needs and repayment capacity.
The interest rate and service fees do not exceed 2.5 percent monthly, compared with the 20-percent monthly rate under the so-called 5-6 system. Documentation is simplified and processing time is reasonable.
“Through the P3, our poor sectors can find relief from overly expensive borrowings as they pursue their livelihood activities,” Lopez said.