A high-ranking official of a Department of Trade and Industry-attached agency has revealed that even traditional Indian lenders based in the Philippines want to avail of the Pondo sa Pagbabago at Pag-Asenso, or P3, Program of the government.

Small Business Corporation or SBCorp president and CEO Robert Bastillo made the revelation when he guested on the second Daily Tribune's Asian Innovation Forum on Tuesday.

He said half of the funds allocated to P3 are meant for cooperatives, micro-finance institutions, and private financing companies that have members that can easily access micro-entrepreneurs, particularly those who own sari-sari or small stores.

"P3 was conceptualized to combat loan sharks or informal money lenders. When we visited a cooperative in a municipality in Bicol recently, we discovered that Indian lenders were now lowering their interest rate to 5 percent per month," Bastillo said.

"Surprisingly, some Indian lenders even wanted to avail themselves of our P3 program. If that is the case, it means the program has an impact," he added.

He explained that SBCorp is ready to provide funding to micro and small entrepreneurs to eventually expand operations in the long run or when banking institutions are not yet ready to provide MSE loans to them due to a lack of a banking track record.

"That is why we are asking Congress to add more funds to SBCorp. The current fund is not enough to help MSMEs in their entrepreneurial journey," he said.

SBCorp estimated that there is a P300 to P400 billion financing gap in the country, which means that banking institutions, even cooperatives, and microfinancing institutions are not able to respond to the needs of MSE lenders.

"We are asking for P50 billion for our total capital, including our current fund. While for the P3, we are aiming to make it a full-fledged law for it to have automatic appropriations. We aim that 10 to 15 percent of the current financing gap will be given to us, enough to serve MSEs and cooperatives, among others," he said.

In March 2023, the House of Representatives approved on third and final reading of House Bill 7363, or the proposed P3 Act, with an overwhelming 278 votes.

The "P3 Act aims to provide an affordable, accessible, and simple financing program for MSEs, especially those in the poorest populations and underserved areas.

HB 7363 mandates the creation of the P3 Fund, which shall be lent out to qualified MSEs under such terms and conditions that will meet the purposes of the Act.

The P3 Fund shall be accessible through the SBCorp. and accredited partner financial institutions such as rural banks, thrift banks, development banks, cooperative banks, cooperatives, non-stock savings and loan associations, microfinance non-government organizations and lending companies.

Currently, the P3 Program, with an annual allocation of P1.5 billion from the national government, is intended to provide micro-entrepreneurs with an alternative source of financing that is easy to access at a reasonable interest rate, that is in a safe environment away from dubious practices of informal lenders, and that is sustainable as delinquent borrowers are effectively barred from borrowing in the next loan cycle.

Under the P3 Program, a microenterprise can borrow between P5,000 and P200,000, depending on its business status and repayment capacity, with no collateral requirement.

Interest rates and service fees, all in, do not exceed 2.5 percent monthly.