Special business lending program for Marawi

By DTI-OSEC-PRU
November 29, 2017

MANILA – Department of Trade and Industry’s (DTI) financing and guarantee attached corporation, Small Business Corporation (SBCorp) attached micro-finance will be offering zero percent interest loans to help the constituents of Lanao del Sur, specifically Marawi micro entrepreneurs displaced by the war, starting early December 2017 up to April 2018 as part of government rehabilitation efforts of Marawi City.

“The recent events in Marawi raised the need to generate several programs that will aide in the rehabilitation of Marawi and the full assistance to affected residents. In support of government-wide efforts to help the people of Marawi, we will be working closely with our Maranao countrymen to ensure they have access to the needed funds to get their businesses back on their feet,” said Trade Secretary Ramon Lopez.

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 SBCorp. This will be complemented by starter livelihood kits being distributed by the DTI.

For Micro Finance Institutions (MFIs) that want to start lending to the Lanao del Sur area in solidarity with the people of Marawi and the entire province, the P3 Program will provide credit risk support to MFIs in exchange for their timely and quick response. A DTI-SBCorp team has been assigned at DTI-Marawi to set up the P3 facility, which will also be supported by DTI-Cagayan de Oro.

To date, SBCorp – with the support of the DTI regional and provincial offices – has accredited a total of 94 MFIs, plus another 45 MFIs in the pipeline. Moreover, the P3 Program is now rolled out throughout the entire country from north to south except for a handful of provinces, with close to 40,000 borrowers to date.

Most of the MFIs that have signed up are cooperatives, i.e. self-help people’s organizations that have a good grasp of the needs of their members to grow their businesses. Likewise, several large MFIs – including the Center for Agriculture and Rural Development (CARD) – have aired their support to the program for its timely scale up even in remote areas of the country.

“We laud SBCorp’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 expand their businesses,” said Sec. Lopez.

For 2018, the government will add another P1.0 billion to the P3 fund to support more micro enterprises in growing their small business.

The SBCorp will be accrediting least five local MFIs per province in the coming years to ensure that micro enterprises will have easy and reliable access to reasonably-priced credit within their own locality, with a total of 400 grassroots conduits targeted. The agency will also support these MFIs by way of capacity-building training.

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 opened the invitation to the rural banking sector to support the P3 Program, given the more than 2,000 branches nationwide that are mostly rural-based. These make the small banks a potent force for scaling up the P3 Program and for improving the fund-channeling system so that the fund reaches micro enterprises in a timely and judicious manner.

Launched last April 2017, the P3 Program supports micro entrepreneurs across the country with an initial funding of Php850 million via lower cost loans. The program is intended to help those people involved in micro enterprises and who are vulnerable to usurious lenders in the absence of an alternative source.

Under the program, a micro enterprise can borrow between P5,000 up to P100,000 depending on its business need and repayment capacity. Interest rate and service fees do not exceed 2.5 percent monthly as compared to the 20 percent monthly rate under the 5/6 system. Documentation is simplified and processing time is also reasonable.

Among those helped by the P3 Program were Rose Marie Obena of Tacloban City, Leyte and Hercolano Villasin of Calubian, Leyte. Obena was the sole survivor among her family after Typhoon Yolanda, and was among the first batch of market vendors that accessed a P3 loan to expand her store. The 78-year old Villasin, on the other hand, accessed the P3 Program through the Fatima Multi-Purpose Cooperative (FATIMA MPC) to support his dried fish business, which he had been doing since he was in his teens.