WITH added funding set aside for lending to micro, small and medium enterprises, the Department of Trade and Industry (DTI) said it hopes to eliminate the need for so-called “5-6” informal lenders by 2022.
Trade Secretary Ramon M. Lopez said it is “possible” that the agency’s Pondo sa Pagbabago at Pag-asenso (P3) program will see a P4 billion boost to its P1-billion yearly budget starting 2019. This, “until we replace all 5-6.”
The funds will be lent out to microenterprises and entrepreneurs with the poorest provinces prioritized, to address challenges in accessing credit. These include market vendors, agri-businessmen and members of cooperatives, industry associations and others.
Loanable amounts per borrower can range from P5,000 for start-ups to P300,000, with a maximum interest rate of 26% per annum with no collateral requirement. The rate is significantly lower than the 20% per day or week or month charged by usurers as well as that charged by microfinancing institutions.
P3 allocates P100 million for direct lending by SB Corp. Target loan beneficiaries are the small enterprises in priority and emerging industries, start-up businesses and technology innovators.
The agency estimated last year the size of the informal lending market at P30 billion nationwide.
“Assuming [we replace] P6 billion a year, so over five years… Will try to hit (the target) by 2022,” Mr. Lopez added.
He confirmed that President Rodrigo R. Duterte intends to allocate P4 billion more to the program “to help the real microentrepreneurs.”
He added that there are also plans to add P2 billion more to other MSME-supportive projects that are not necessarily within the scope of the micro financing program. — Janina C. Lim