MAGLAYA
P3 FUND FOR 2018
The national government, through the Small Business Corporation (SB Corp.), the microfinancing arm of the Department of Trade and Industry (DTI), will set aside P1 billion for 2018 in a bid to sustain its flagship program of providing microenterprises an alternative source of capital that is accessible and at a reasonable cost.
DTI Undersecretary Zenaida Maglaya, who heads the agency’s regional operations group, said that this is their response to President Rodrigo Duterte’s promise to provide affordable loans to micro entrepreneurs through the Pondo sa Pagbabago at Pag-asenso (P3) program.
“Through the P3, sectors can find relief from overly expensive borrowings as they pursue their livelihood activities,” she said in a statement.
P3 program
The P3 program is a P1-billion financing program intended to give micro, small, and medium enterprises (MSMEs) better access to financing, reduce their cost of borrowing, and battle loan sharks “preying” on these small entrepreneurs. The fund will prioritize the country’s 30 poorest provinces.
Initially, the program was launched in Tacloban in Leyte, San Jose in Occidental Mindoro, Alabel in Sarangani earlier this year and was eventually implemented nationwide in April, with an initial funding of P850 million.
Beneficiaries
The program’s primary beneficiaries include microenterprises and entrepreneurs who may not be able to easily access credit, including market vendors, agri-businessmen and cooperative members, as well as small industry associations.
Earlier this year, DTI Central Visayas Director Asteria Caberte said they were keen on approving more local conduits to hasten the release of P3 loans in the region.
Caberte said they found that local conduits under the P3 program process loans faster than their national counterparts.
“Our findings were that local conduits work faster than the national partners, maybe because these people have a track record as well as an existing line of communication with local borrowers,” she had said.
SB Corp.
The P1-billion fund from the Office of the President will be coursed through the SB Corp., which will accredit partner institutions such as non-bank microfinance institutions (MFIs), cooperatives and associations to serve as conduits. With borrowers identified through these, collection of repayments will be efficient.
At the local level, SB Corp. recently approved the First Consolidated Bank of Bohol and the Cebu-based Lamac Multipurpose Cooperative.
SB Corp. earlier said it was in talks with other potential partners including the Gabay Multi-Purpose Cooperative, Coolway Multi-Purpose Cooperative, Ramon Aboitiz Foundation, Inc., Cebu People’s Cooperative, as well as RFC Cebu.
National conduits
Among P3’s accredited national-level conduits are Cebuano Lhuillier, Radiowealth Finance Corp., Taytay sa Kauswagan, Inc., and MASS-SPECC Cooperative Development Center.
As of Nov. 24 this year, a total of 16,210 micro entrepreneurs have been receiving financial aid from the program with four national MFIs and 90 local conduits assisting in delivering the microloans in the countryside. Meanwhile, 45 MFIs are still set to be accredited.
According to the DTI, a total of P485.41 million has been coursed through partner conduits while P307.8 million has been released to microfinance borrowers.
The P3 program was an offshoot of President Duterte’s directive to replace the “5-6” money lending system and is also seen to help stabilize the supply and cost of commodities in public markets, encourage small entrepreneurs to grow their businesses, as well as offer employment and generate income for Filipinos.
Easy access
DTI said P3 will make it easier for entrepreneurs to access credit since it only requires minimal documentation; takes only one day to process; has an interest rate of 2.5 percent per month; and provides a convenient repayment scheme.
Under the program, a microenterprise can borrow between P5,000 and P10,000, depending on the need as well as repayment capacity, with no collateral requirement.
Interest rate and services fees, all in, do not exceed 2.5 percent monthly, which the DTI said is a huge relief from the 20 percent monthly rate under the 5-6 loan system.