The House Committee on Ways and Means on Monday approved the proposed Puhunan, Tulungan, Kaunlaran (PTK) Act, which aims to provide micro, small and medium enterprises (MSMEs) easier access to government loan programs.
Authored by Speaker Alan Peter Cayetano, the substitute bill will institutionalize microfinance programs and access to capital for MSMEs.
Cayetano said the proposed loan program is similar to “5-6” lending scheme in terms of access to microfinance but provides a 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 they fall under the priority business areas of their respective regions.
Each loan shall not exceed P10,000 for first time borrowers, P30,000 for second time borrowers, and P250,000 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.
The measure said P125 billion shall be appropriated for the next 25 years upon the implementation of the proposed law.
According to the bill, the Department of Trade and Industry (DTI), in coordination with the Department of the Interior and Local Government, Department of Agriculture, Department of Science and Technology, Department of Tourism, National Economic and Development Authority, and the Technical Education and Skills Development Authority, shall develop a comprehensive program for the development of MSMEs at all regions of the country.
It said the goal of the program is to protect the capital of small proprietors, ensure the success of their MSMEs, and likewise transform these MSMEs into five-star businesses by providing them with assistance and the necessary resources to help their businesses flourish.
The program shall be national in scope but shall be 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.
To qualify for the loan program under the measure, the borrower must be: at least 18 years of age; a member in good standing of the duly registered cooperative, or association, or a resident of the LGU, from which he/she intends to avail of the loan; willing to state under oath the facts establishing the foregoing; comprehensive feasibility study of the business proposal; and has attended a DTI-accredited livelihood seminar, as evidenced by a certificate of participation, and possesses credit-worthiness, as likewise proven by a certificate issued by the DTI for that purpose.
The measure said each participating local government unit (LGU) must prepare a comprehensive feasibility study for the development of a loan program. Each LGU must fund, from its internal revenue allotment, at least P5,000, where possible and practicable, or 30 percent of the total funding cost related to small business improvement, agricultural improvement, institutional advancement and consumer protection, whichever is higher. Likewise, for this purpose, the LGU shall maintain a separate and dedicated office which shall be responsible for the overall implementation of the program in the locality.
It also said participating cooperatives or associations, and LGUs with loan programs are hereby authorized to accept donations from the private sector in order to augment the available funds for the loan program.
It added any person, or corporate entity, may donate funds, equipment, materials, or services for the improvement of the PTK Five-Star and/or PTK loan program. Such donations shall be done through a memorandum of agreement between the cooperative or association, LGU, and the donor. The agreement shall expressly state the value of the donated funds, materials, or services.
Also, the bill said there shall be a PTK Task Force in charge of coordinating with banks and financial institutions on their existing programs on micro financing. This shall be consolidated and submitted to DTI to be taken into consideration for the PTK Loan Program.