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Enter P3, a party-list solon's alternative to 'five-six' lending
Enter P3, a party-list solon's alternative to 'five-six' lending
At A Glance
- Small and struggling businesses should shun predatory "five-six" moneylenders in favor of the kinder Pondo sa Pagbabago at Pag-asenso program (P3)--the proposed financial intervention initiative of Bicol Saro Party-list Rep. Brian Raymund Yamsuan.
(MANILA BULLETIN)
Small and struggling businesses should shun predatory "five-six" moneylenders in favor of the kinder Pondo sa Pagbabago at Pag-asenso program, or P3.
The problem is, P3 is still a mere proposal in the House of Representatives, having been hatched in the mind of Bicol Saro Party-list Rep. Brian Raymund Yamsuan.
That's why Yamsuan, a rookie solon in the 19th Congress, is putting great pressure on legislature to pass his measure, House Bill (HB) No.7363 or the ‘Pondo sa Pagbabago at Pag-asenso Act’ (P3).
“The proposed P3 program under this measure will free micro entrepreneurs from the clutches of ‘five-six’ money lenders and loan scammers and offer them the opportunity to expand their businesses through easy-to-pay, low-interest credit,” said Yamsuan.
He says the measure's target beneficiaries are small sari-sari store owners, carinderia operators, market vendors, and other small community-based entrepreneurs.
Over 90 percent of businesses in the country are tagged as micro, small, and medium enterprises (MSMEs). These usually resort to five-six lending schemes that only drive them deeper in debt because of excessively high interest charges and other hidden fees.
Five-six lenders usually charge an interest rate of 20 percent per month. This means that if one borrows P5, one will have to pay back P6, hence the term five-six.
Under HB No.7363, the Small Business Corporation (SBC), which is Department of Trade and Industry's (DTI) financing arm, is tasked to extend no-collateral loans, the amount of which shall be set and regularly reviewed by the Micro, Small, Medium Enterprises Development Council (MSMEDC).
The usual loanable amounts offered to MSMEs ranged from P5,000 to P200,000 when the DTI ran a similar program in the past.
To ensure that P3 would be easily accessible to MSMEs, the bill authorizes the SBC to accredit Partner Financial Institutions (PFIs) to extend loans under the program. These include rural banks, thrift banks, development banks, cooperative banks, cooperatives, non-stock savings and loan associations, microfinance institutions and other qualified lenders.
The effective interest rate imposed on P3 loans as proposed under the bill shall not exceed 1 percent per month for direct lending, and 2.5 percent per month if borrowed from accredited PFIs.
Interest earnings from the program shall accrue to the P3 Fund, to be created under the measure. The initial amount deposited to the Fund will come from the SBC.