STATE-OWNED Small Business Corp. (SB Corp.) has released P219 million in loans to micro businesses in 2019 under its Pondo sa Pagbabago at Pag-Asenso Program (P3) program, which helps entrepreneurs stay away from 5-6 loan sharks.
Francisco Buenavides, group head for Visayas, told SunStar Cebu that the funds were released through the partner conduits of SB Corp., a micro-financing agency attached to the Department of Trade and Industry.
The program benefited roughly 6,265 micro businesses in Central Visayas.
“5-6 is a P35 to P40 billion underground economy and our funds lent nationwide is P4.5 billion and that’s 10 percent of the ecosystem. So it’s a (long) way to go but we are being felt in areas concentrated with micro business even in Taboan and Carbon,” Buenavides said.
Buenavides said their partners include cooperatives, associations, lending companies and rural banks that are engaged in micro-lending.
“We’re looking to accredit partners that can lend the program’s fund in every one hour distance all throughout the country. That is one way to maximize beneficiaries,” he said.
The P3 fund is “designed to be lent out to micro enterprises with asset size not exceeding P3.0 million at not more than 2.5 percent per month all in interest rate and service charges. This 2.5 percent monthly cap is an effective rate, based on diminishing balance of the principal portion of the loan.”
“5-6 lending imposes an interest rate of at least 20 percent monthly and could go significantly higher given the weekly or daily collection schedule,” according to SB Corp.
A micro enterprise borrower may avail itself of a P5,000 up to P200,000 loan.
It will depend on the size of the business and the enterprise’s ability to pay.
For enterprises with at least one employee, the beneficiary can borrow up to P200,000.
The fund should be used for the enterprise’s expansion and additional supplies of the business.
“Last year, we reached 85,000 micro enterprises,” he said.
SB Corp. also released P38 million and P4.9 million for its retail and wholesale lending, respectively, for Cebu, Bohol, Negros Oriental and Siquijor.
Buenavides said the firm also has regular financing sourced from its funds.
“Our mandate is really to help micro, small and medium enterprises through financing and technical assistance. When we say retail financing, it’s a kind of financing that we do directly on a per entrepreneur basis. So we directly deal with them when we market, we package the loans and then we manage it,” he said.
SB Corp.’s loan pricing starts at 24 percent per annum, for gradual reduction over time for good borrowers. The P3 program has a 2.5 percent monthly interest.
Buenavides said there were some businesses who failed to pay and their default action is to restructure or to look for means for the borrowers to make a payment arrangement with SB Corp. (JOB)