DTI boosts P3 funding for MSMEs by P100 M
The Department of Trade and Industry (DTI) added another P100 million loan fund for micro, small and medium enterprises (MSMEs) under the Pondo sa Pagbabago at Pag-asenso (P3) program.
This after DTI renewed its partnership with microfinance non-government organization (NGO) Center for Agriculture and Rural Development Inc. (CARD).
Under the memorandum of understanding (MOU) signed by the DTI and CARD, there will be an additional P100 million fund available for lending to MSMEs on top of the initial P100 million allocated earlier.
In a statement, DTI Secretary Ramon Lopez said CARD, which is considered the biggest microfinance institution, would be a good credit delivery partner for the P3 program as it could reach areas not usually covered by other partners.
He said CARD has supported government initiatives to help micro entrepreneurs grow, particularly in the countryside.
The loan fund is expected to benefit over 20,000 MSMEs, in addition to the current 41,800 MSMEs under the P3 program with CARD.
Apart from making available an additional P100 million, the MOU also covers the conduct of orientation, development trainings, livelihood and financial literacy to clients.
Under the P3 program, micro enterprises can avail of loans amounting to P5,000 to P200,000, depending on the requirement and capacity to pay.
Loans have an interest rate and service fees capped at 2.5 percent per month.
The government is implementing the P3 program in line with President Duterte’s directive to enable MSMEs to have access to financing and remove the “5-6” money lending system.
In exchange for getting loans without
collateral or any documentary requirements, borrowers in the “5-6” system have to pay exorbitant interest rates of 20 percent or even higher.
DTI through SB Corp. has so far assisted 50,500 micro enterprises under the P3 program.
A legislative measure to institutionalize P3 has been approved on third and final reading at the House of Representatives, while the counterpart measure is pending at the Senate.