DTI to launch MSME lending scheme to fight 5-6

loan shark

A lending scheme for micro, small and medium industries (MSME) will soon be implemented by the Department of Trade and Industry (DTI) to serve as alternative to the 5-6 lending operations so rampant in the MSME community.

A fund portfolio of one billion pesos will be allocated starting next year to implement this alternative program.

Minimum loan amounts will be P2,000 with interest charges estimated at 2 per cent a month.

Comparatively, the 5-6 scheme charges an interest of 20 per cent a month.  However, they are popular among small enterprise borrowers because they are accessible and provide the needed cash fast, as fast as within the day the loan is applied for.

Micro-finance institutions have long provided credit schemes with lower interest rates but loan processing involves some requisites and procedures.

“MFIs take a little more time. But they are legitimate. There are many MFIs around the country. But they want something fast,” DTI Secretary Manolo Lopez said in a forum held early this month.

After the initial year of implementation, the DTI chief said his office will test the market demand for his office’s funding program and check if there is a need to eventually increase the budget “to P1 billion per region.”

Abolishing loan shark operations is one of the early campaign promises of President Rodrigo Duterte.

Photo credits: www.guidesinfo.com.sg