Senate Trade and Commerce Committee Chair Koko Pimentel III on Wednesday reiterated the need to institutionalize the government’s Pondo sa Pagbabago at Pag-asenso (P3) Program to permanently establish a viable alternative for small business owners that fall prey to “5-6” loan sharks who charge “unconscionable” interest rates.
The senator from Mindanao said he understands why President Rodrigo Duterte was angered by those involved in “5-6” lending schemes that take advantage of cash-strapped Filipinos.
The “5-6” lending scheme imposes an interest rate of at least 20 percent per month or more, depending on the frequency of the collections, which are done weekly or daily. While lenders are unregistered and operate without licenses to lend, there are reports that “5-6” is a P30 billion industry that rakes in profits for lenders while loan recipients sink deeper into debt.
“The continued operations of “5-6″ loan sharks is a serious problem that can be addressed by informing our people that there are viable alternatives available.”
“Nakakagalit talaga ang mga ito. Naghihirap na nga ang tao, mas papahirapan pa nila. These 5-6 loan sharks trap our most vulnerable citizens in an unbreakable cycle of debt that financially cripple families,” lamented Pimentel, who authored Senate Bill (SB) 2017, also known as the P3 Act.
The measure, if passed, would institutionalize the Department of Trade and Industry’s (DTI) P3 Program, a financing initiative of the government to assist small business owners in the country by providing affordable and cost-efficient loans with not more than 2.5 percent monthly interest.
Target beneficiaries of the P3 Program are micro entrepreneurs such as market vendors, sari-sari store owners, and stall owners, among others. A borrower may obtain loans from P5,000 up to P200,000 depending on the size of the business and the recipient’s ability to pay.
According to Pimentel, the continued operations of “5-6” loan sharks “is a serious problem that can be addressed by informing our people that there are viable alternatives available, as well as by finding means to improve our citizens’ financial literacy.”
Pimentel also urged the Small Business Corporation (SBC), which manages the P3 Program, to ramp up efforts to improve awareness of the microfinancing program.
“I believe more people have to be informed about the P3 Program to prevent those in need from running to these loan sharks.”
“While the Program has assisted over 51,000 micro enterprises throughout the country and has distributed a total of P1.6 billion in loans, I believe more people have to be informed about the P3 Program to prevent those in need from running to these loan sharks. We have to convince our citizens to use their kokotes. Kailangan natin gamitin ang P3 panlaban sa 5-6,” stressed the legislator. (We need the use P3 against 5-6).
If passed, Pimentel’s proposed P3 Act would establish the “P3 Fund,” which will be made available to qualified micro enterprises. It will be accessible via accredited partner financial institutions such as rural banks, cooperatives with licenses to lend, micro financing institutions, or lending companies licensed by the Bangko Sentral ng Pilipinas, the Cooperative Development Academy, or the Securities and Exchange Commission.
The loans from the P3 Fund shall impose interest rates not exceeding 2.5 percent per month, with interest earnings going to the said fund. Beneficiaries will not be required to provide collateral.
