Gov’t to Roll Out PHP1-B Funding for Micro-Enterprises Next Year

The government has allotted PHP1 billion for next year as a new source of funding for startups and micro-enterprises, Trade Secretary Ramon Lopez said on Monday.

During the Manufacturing Summit 2016 in Makati City, Lopez said the funding next year will come from the Office of the President but will be under the budget of the Department of Trade and Industry (DTI) in the coming years.

On the sidelines of the event, he added that the PHP1 billion fund next year is only an initial amount for a program to be called “Pondo para sa Pagbabago at Pag-asenso” or P3.

The program aims to improve micro-enterprises’ access to finance.

Under P3, the DTI targets to allot PHP1 billion per region, or a total of PHP18 billion, as a source of financial products and services for startups and micro-enterprises.

“We will try to do the funding, retailing of these micro funds that will reach to micro-enterprises,” said Lopez.

The trade chief mentioned that the government intends to roll out the program through wholesale funding via DTI’s financing arm Small Business (SB) Corp., which will do the retailing to microfinance institutions (MFIs).

“We have MFIs; the big ones, they are about six,” said Lopez.

He added that CARD MRI, which has about three million borrowers and with a repayment rate of 98 percent, will be one of the MFIs under the new program.

“CARD is one of them and we will identify five more. This will not be inclusive (to one MFI),” the official said.

He noted that the interest rate under the P3 will be within the market rates for small and medium enterprise (SME) lending of about 8 percent to 9 percent but lower than that of a loan shark, such as the so-called ‘5-6’ which has an interest rate of 20 percent.

“The collector is the MFI. They already have the system,” said Lopez. (PNA)CVL/KMC