TWO cooperatives in Cebu will receive a total of P13 million from the Small Business Corp. (SB Corp) within this week as part of the government’s private conduits for the billion-peso Pondo Para sa Pagbabago at Pag-asenso (P3) program.
SB Corp. Visayas head Francisco Buenavides said it has accredited Coolway Multi-purpose Cooperative and Gabay Multi-purpose Cooperative, whose headquarters are based in Bogo City, as conduits for the P3 funds.
“SB Corp. will release to Gabay P8 million, and P5 million to Coolway by June 27 or June 28,” Buenavides told SunStar Cebu Monday.
SB Corp. is an attached financial institution of the Department of Trade and Industry (DTI).
At present, SB Corp. has accredited only these two institutions in Cebu. But Buenavides said some microfinance institutions as well as cooperatives have expressed interest to join the program.
Some of them include the Lamac Multipurpose Cooperative and the Radiowealth Finance Company (RFC) in Cebu, which is still awaiting further instructions from its RFC Manila headquarters so it could deploy the P3 funds here.
Under the government’s P3 program, loan amounts to end-borrowers will be in the range of P5,000 to P100,000, at a maximum interest rate of 2.5 percent per month, with no collateral requirement.
Buenavides previously said private conduits cannot impose interest on borrowers beyond 2.5 percent in a month. The program promises “easy and quick” access to loans, and the private conduits will decide on the documentary requirements they will require from borrowers.
SB Corp. practices two modes of delivery for the P3 funds. The more extensive distribution system will be under wholesale lending where SB Corp. will partner with conduits including micro-finance institutions, cooperatives, associations and other organizations.
The other delivery mode is the direct retail lending, which may include individual enterprise borrowers, startups and other funding needs, added DTI.
P3 was part of the campaign promise of President Rodrigo Duterte in 2016, who previously declared his plans to provide affordable micro financing to micro and small entrepreneurs to discourage them from availing themselves of credit from 5-6 lenders who charge borrowers usurious rates of 20 percent interest per month.
The P1 billion fund came from the 2017 General Appropriations Act (GAA). Depending on the performance of this initial funding, P3 may be scaled up and included in the GAA in the next years under the current administration, Buenavides said.