House panel OKs microfinance programs for MSMEs

House panel OKs microfinance programs for MSMEs

House of Representatives

MANILA – A measure institutionalizing microfinance programs and access to capital to support and grow micro, small and medium enterprises (MSMEs) hurdled committee level at the House of Representatives.

The House Ways and Means Committee approved on Monday a substitute bill to the proposed Puhunan, Tulungan, Kaunlaran (PTK) Act, which aims to provide MSMEs easier access to credit through a loan program with simplified processes and low interests.

Speaker Alan Peter Cayetano, a principal author of the bill, said the proposed loan program is similar and as dynamic as the infamous ‘5-6’ lending scheme in terms of access to microfinance but provides much lower and affordable interest rates.

“With this measure in place, Filipino families and enterprises would no longer resort to borrowing from unconscionable ‘5-6’ lenders and should be able to feel the effects of the country’s exceptional GDP (gross domestic product) growth through efficient and effective access to loan facilities,” Cayetano said.

Under the bill, the PTK loan program shall cater exclusively to micro-enterprises in need of capital, whether or not they fall under the priority business areas of their respective regions.

Each loan shall not exceed PHP10,000 for first-time borrowers, PHP30,000 for second-time borrowers, and PHP250,000 for those borrowing a third time or more. Loan proceeds shall be exclusively used for capital.

The allowable interest rate shall not exceed 12 percent per annum.

Cayetano also highlighted that the proposal also creates a comprehensive and development program for MSMEs.

The bill states that the PTK Five-star Program aims to protect the capital of small proprietors, ensure the success of their MSMEs and transform these enterprises into five-star businesses by providing them with assistance and the necessary resources to help them flourish.

The program shall be national in scope but tailored to fit the business environment, market demands, and available resources of each region.

The bill proposes that every year, five top-performing enterprises per size and category in each region shall receive a five-star award and shall be eligible for grants not less than 10 percent of their current capital to be solely used for further business capitalization.

Both programs shall be spearheaded by the Department of Trade and Industry in coordination with other relevant government agencies.

An amount of PHP125 billion shall be appropriated for the next 25 years upon the implementation of the proposed law. (PNA)

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