P1B in budget to help get rid of loan sharks
As the government moves to clear the country’s streets of unregulated loan sharks, an alternative is available for entrepreneurs: a P1-billion budget for interest-free microfinancing.
Sen. Loren Legarda, chair of the Senate committee on finance, made this disclosure yesterday as she welcomed President Duterte’s crackdown on Indian lenders, who lure borrowers into easy, no-paperwork loan schemes but charge interest of as much as 20 percent.
These “5-6” moneylenders, mostly Indian nationals, are popular in the informal economy, serving as a last resort source of microcapitals to the country’s vendors and other small entrepreneurs.
The President this week ordered the arrest of these loan sharks, noting that they operate without permits and do not remit taxes to government.
“We put in a P1-billion microentrepreneurship development fund [in the national budget] so people won’t have to succumb to loan sharks,” Legarda told the Inquirer in an interview.
Not matter of race
“We’re against usury. It’s not a matter of race or religion or creed, [whether you’re] Indian or what, but just the usury practice. That’s why in the budget, we put a billion [pesos] collateral-free, interest-free loans to microentrepreneurs,” she said.
The fund, she said, would be available through Small Business Corp. (SB Corp.), the financing arm of the Department of Trade and Industry (DTI) and one of the smallest government-owned and -controlled corporations.
SB Corp. serves as the government’s chief agency for “small enterprise development financing and small credit delivery systems,” according to its website.
Legarda said the fund, approved under the 2017 national budget through the support of the President, Congress and the Department of Budget and Management (DBM), aimed to support “microentrepreneurs who need capital assistance.”
Easy terms
SB Corp. is expected to draft and soon enact implementing rules and regulations (IRR) detailing mechanics on how Filipinos could avail themselves of state microcapital support.
“They can go to Small Business Corp., which is under the DTI. They will be provided collateral-free, low- or no-interest loans depending on final IRR of SB Corp.,” Legarda said.
“This will prevent them from falling prey to usury practices,” she said.
The goal next year is for the government to make available a P1-billion fund for each of the country’s 18 regions.
“By 2018, we hope to fund P1 billion per region for micro-enterprise development. This is a project and advocacy of the President, which both DBM and Congress support,” she said./rga
