DTI extends P1.63 B loans to micro-enterprises

The Department of Trade and Industry (DTI) has extended P1.63 billion worth of loans to more than 58,000 micro-enterprises under the Pondo sa Pagbabago at Pagasenso (P3) program.

In a statement, the DTI said the P3 program has assisted 58,078 micro-enterprises by releasing a total of P1.63 billion worth of loans as of Dec.4.

Trade Secretary Ramon Lopez said the P3 program is among the measures being implemented to provide support to micro, small and medium enterprises (MSMEs).

“We reiterate that the government is committed to support our micro entrepreneurs in setting up and running their businesses with other DTI programs and initiatives,” he said.

The P3 program was launched in line with the directive of President Duterte to eliminate the “5-6” lending system which leads many individuals to fall into a debt trap.

In the “5-6” system, individuals who get loans without collateral or any documentary requirements have to pay exorbitant interest rates of 20 percent or even higher.

Under the P3 program, a micro-enterprise can borrow P5,000 up to P200,000, depending on the requirement and repayment capacity, with no collateral requirement.

The interest rate and service fees, all in, would not exceed 2.5 percent per month.

Access to finance is one of the concerns raised by microenterprises.

As the DTI wants to promote and assist the MSME sector, Lopez said the agency also welcomes the move to file bills at the Senate and House of Representatives to institutionalize the P3 program.

“If every year we have this allocation for the P3 program, we will be able to reach more MSMEs and it will be easier to eradicate the P30 billion industry of informal money lending,” Lopez said.

Filed in September, Senate Bill 2017 or “An Act Providing a Socialized Microfinancing Program for Micro Enterprises Thereby Promoting Entrepreneurship” aims to address financing concerns of microenterprises throughout the country and help them sustain their businesses.

Last June, the House of Representatives passed House Bill 7446 or the P3 Act which seeks to establish the P3 program as an affordable and easy access alternative source of financing for microenterprises.