Duterte Admin Aims P1 Billion Lending Program For Small Businesses To Abolish "5-6" In 2017

The Department of Trade and Industry is aiming P1 billion fund for micro-financing institutions (MFI) which will loans to small businesses beginning 2017, as reported on GMA 7 news program “24 Oras” on Tuesday.

According to Trade and Industry Secretary Ramon Lopez, the fund would compete and, in the end, replace the illegal “5-6” lending system for small and medium enterprises (SMEs), which makes up more than 90 percent of the country’s businesses.

“Ang intensyon talaga ay mahinto at itigil na ang 5-6. Illegal kasi yan. Unang-una mataas ang interest. Imagine hihiram ka P5 ibabalik mo 6 pesos? It’s 20 percent. Yung iba diyan applied per day,” Lopez explained.

“We will go through MFIs but this will be a special fund coming from government. Ipapahiram ang bulk funds na ‘to. We will tap the five or six micro-finance institutions na may sistema na at may network na,” he added.

Instead of a 20 percent interest rate per month, Lopez said the MFI lending program the DTI was drafting would have a 20 to 25 percent interest rate per year, or just two percent per month.

In the case of a P50,000 loan, interest would be P10,000 in one year, compared to the one to two months in the 5-6 system.

Furthermore, the DTI said businesses can ask for loans as small as P2,000.

The DTI added that the government was also exploring a future program in which each region would be provided P1 billion for SME assistance.

Source: GMA News