Anti-'5-6' program pours PHP43.94M start-up funds in Tacloban

TACLOBAN CITY, Feb. 9 (PNA) – Government has poured funds for small businesses in Eastern Visayas during Thursday’s launching of a micro financing program meant to kill the 5-6 lending scheme in the country.

The Department of Trade and Industry-Small Business Corporation (DTI-SBC) turned over PHP43 million to eight micro financing institutions (MFIs) and cooperatives operating in the region.

“The more extensive distribution system will be under wholesale lending where SBC will partner with conduits. These are selected MFIs and organizations to widen coverage and fast track access to the P3 or the Pondo sa Pagbabago at Pag-asenso (fund for change and progress),” said DTI-SBC President Bartholomew Brillo Reynes.

The remaining PHP940,000 cash were released to 26 meat vendors, fish traders and small store owners doing business at the city’s public market here.

The trade department had set up an office inside the city government-run building within the market complex to process applications and collect payments on a daily basis.

“The funding needs of small businessmen are not usually responded to by formal source of funds such as banks and registered lending firms. Consequently, they resort to 5-6 lending scheme with high interest rates,” Reynes explained.

The 5-6 scheme, popularized by Indians, issues small loans at a 20 percent interest rate. Payments are collected on a daily or weekly basis.

This city is the pilot area in the Visayas in the rolling- out of the new micro financing program of President Rodrigo Duterte.

Dressed chicken trader Aiza Mortega, 31, was one of the first P3 beneficiaries in the city. She borrowed PHP50,000 from the government to finance the expansion of the family business.

“It’s really affordable since I only have to pay PHP472 daily in the next five months. This is my first time to get a loan. I never tried it from 5-6 lenders as I believed that high interest rates would take away my profits,” Mortega shared.

DTI Regional Director Cynthia Nierras said P3’s direct retail lending will eventually be expanded to poor provinces in the region - Leyte, Samar, Eastern Samar and Northern Samar.

“We have been receiving news that some people engaged in 5-6 lending have started offering lower interest rates as government makes P3 accessible to micro entrepreneurs. This is really good news,” Nierras told reporters.

Loan amounts to end-borrowers will be from PHP5,000 to PHP175,000, at a maximum interest rate of 2.5 percent per month without collateral.

Earlier, the national government launched pilot testing of the program in San Jose, Occidental Mindoro for Luzon and Alabel, Sarangani for Mindanao.(PNA)

FPV/SQM