PRRD’s micro fund
program to pilot-run this month - DTI
January 9, 2017
MAKATI CITY –
Following President Rodrigo Duterte’s directive to replace the “5-6”
money lending system and provide an affordable micro-financing for the
country’s micro, small and medium enterprises (MSMEs), the
government’s Pondo sa Pagbabago at Pag-asenso (P3) program pilots this
month in Mindoro, Sarangani and Leyte, among the top 30 poorest
provinces, to represent Luzon, Visayas and Mindanao, the country’s
trade chief said.
“The P3 is designed to bring
down the interest rate at which micro-finance is made available to
micro enterprises,” said Department of Trade and Industry (DTI)
Secretary Ramon Lopez.
The 2017 General
Appropriations Act has included an initial funding of P1 billion for
financial assistance, a part of the planned P19 billion financing
initiative for micro and small businesses in the next five years.
Helping the poorest
The program’s fund will be
lent out in the business centers of the poorest provinces (based on
poverty incidence), where the participating microfinance institutions
(MFIs) and the Small Business Corporation (SB Corp.) can operate.
An attached agency of DTI,
SB Corp. shall administer the P3 Program, including the creation of a
Program Management Office (PMO), which will open a separate back
account for the P3 Program, to oversee the management and monitoring
“Fund delivery to
microenterprises shall be carried out in either by wholesale lending
to non-bank financial institutions like MFI-NGOs, and cooperatives
which shall on-lend the fund to beneficiaries or by direct lending by
SB Corp,” Sec. Lopez said.
include microenterprises and entrepreneurs that do not have easy
access to credit, or are accessing credit at very high cost, such as,
micro-entrepreneurs, market vendors, agri-businessmen and members of
cooperatives, industry associations and co-operators.
Loanable amount per
end-borrower can range from P5,000.00 for start-ups to P300,000.00,
with maximum interest rate of 26% per annum with no collateral
requirement. This rate is significantly below the 20% per day/ week/
month charged by “5-6” lenders. It is also lower than what is charged
by most MFIs.
MFIs may opt for portfolio
guarantee cover of up to 15% of their P3 loan portfolio from SB Corp
at a guarantee fee of 0.4%. The guarantee feature is seen to help MFIs
address the P3 Program’s inherent risk. The guarantee fund will be
sourced from the P3 fund.
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.
Minimum loan amount will be
P300,000.00 with interest rate capped at 10% p.a., with or without
“This alternative funding
dedicated for micro and small enterprises is meant to discourage the
5-6 money lending system in our country,” said Sec. Lopez, adding that
through the established MFIs, the government will reach even the
smallest of entrepreneurs in the country.