Everyone knows how difficult it can be to get a loan, especially if you are poor and don’t have anything to offer as collateral. This is considered as one of the reasons why the poor could not start a business because they do not have money for the capital.
When they need money for emergency or even to start a business or buy something they want, they most likely resort to the 5-6 lending scheme offered by ‘bombays’ (Indians). While the interest is very high [5-6 means you borrow 5 and pay 6; thus, if you borrow Php5,000, you have to pay Php6,000], the poor don’t have much choice because the bombays are quite lenient in who can borrow from them and they don’t require collateral.
Of course, they get a lot of profit from the loan, especially if the borrower couldn’t pay off the entire loan immediately – but for many poor Filipinos, it’s the only way they know.
That’s about to change, though. It another one of its “Change is Coming” promises, the Duterte government is trying to kill the 5-6 industry and offer an alternative for the people. With the government’s own financing plan, people can borrow money from the government even without collateral so they can start a business and have a better life.
Trade Secretary Ramon Lopez revealed, “We are trying to remove and kill the ‘5-6’ industry. We are replacing this with an alternative micro funding. So far we are able to set aside P1 billion new funds. It’s a project of President Duterte to really provide startup funds for the micro entrepreneurs.”
He added, “As a replacement to 5-6, everything will be the same (in this program) except for the 5-6. In everything I mean accessibility, no collateral, ease of getting the funding, and of course we have to make sure collection will be undertaken so we will have to make use of existing, tried and tested micro financing institutions to partner with us and to implement this project with.”
Under the program, Filipinos can borrow up to Php300k without collateral; however, they are expected to use this in business so they can earn enough money not just to pay back the loan but to also help their families have enough money for food.
Isn’t that good news? Initially, the program will cater to the poorest provinces in the country but will soon expand to other areas.
Lopez revealed, “If the initial P1 billion goes well, the idea is to make it P1 billion per region. So maybe in the next budget season that is the what we will request, P18 billion just for funding. But that’s down the road. Initially, we will have to slowly see the market demand.”
For more information and to check whether your area is qualified, visit the nearest DTI office.