What Every Business Owner Must Know About SBC’s P3 Program

Here are five key takeaways about the SBC’s P3 program that should encourage micro, small and medium enterprises to be flexible when planning to raise capital through debt financing.

November 28, 2019 by Randolf Santos

Micro, small and medium enterprises (MSME) in the Philippines often struggle to raise capital through debt financing instruments. How many times did banks reject your loan application?

While some entrepreneurs want to borrow money from banks because of the low interest, several roadblocks await them once they submit a loan application. The difficulty of gaining approval for a bank-financed loan forces many business owners to choose the infamous “5-6 lending” scheme. The Small Business Corporation (SBC) has recognized this trend, which led them to launch the Pondo sa Pagbabago at Pag-asenso (P3) program in 2017. However, MSMEs should know that the initiative may not be for every business owner.

The Program Has Certain Restrictions

The national government formed SBC to support the growth of MSMEs through debt allocation. However, you won’t be eligible for financing assistance if your company’s asset size exceeds Php3 million. New MSME owners should also engage in business for at least one year before planning to borrow money.

Logistics serves as another impediment for some MSME owners. SBC’s Gabriel Ebanen advised that the businesses of loan applicants should be located within an hour of public transportation from an SBC office. This becomes particularly troublesome for MSME owners in regional areas.

You May Need Additional Sources of Debt Financing

MSMEs can borrow between Php5,000 and Php200,000 without collateral based on their size and financial capacity for repayments. Companies with at least one employee can borrow up to Php200,000. In other words, the P3 program won’t be the answer to your big-ticket acquisition or expansion plans.

If you prefer an alternative to bank financing, then VESL can help you with finding the right creditors from its network of lenders. Businesses can borrow up as high as Php30,000,000, depending on your loan history and your matched lender’s underwriting. Our platform has provided clients with access to finance and insurance products that used to be exclusive to large companies.

You Can Get the Same Interest Rate From Other Sources

SBC imposes an interest rate not higher than 2.5% every month for P3 loans. The monthly cap, which includes service fees, is the effective interest rate based on the principal amount’s diminishing balance. By contrast, 5-6 lenders charge at least 20% per month! The actual interest can be even higher because of the frequency of payment collection either on a daily or weekly schedule.

If you apply for a collateralized MSME loan with banks, the interest rates can range from 6.5% to 8% depending on your chosen tenor. Alternatively, when you sign up with VESL, the rates from matching lenders can be as low as SBC’s monthly cap. Registration is also free!

New Debt Means More Risk

Debt financing can ensure that your business passes through the gestation stage (usually three to five years), but it also means a higher risk for your financial profile. Business owners should start reviewing their clients and end-buyers’ probability of default to protect their bad debt reserves, which shouldn’t be used too early in a startup company’s development phase.

VESL can not only give you access to the right lender, but also to the right trade credit insurer to guard your receivables against delinquency. Trade credit insurance helps MSME owners to take care of their creditworthiness. Don’t let delinquent or delayed invoices ruin your relationship with lenders, unless you don’t mind borrowing money from unscrupulous 5-6 lenders.

The Program Needs More Certainty

Department of Trade and Industry Secretary Ramon Lopez suggested the enactment of a law to stabilize the P3 program. Lawmakers earmark a specific amount for the P3 program from the national budget every year, but Lopez believes that regulating the SBC project will ensure that it can last indefinitely.

As of July 2019, more than 89,000 MSMEs in the country have reaped the benefits of the P3 program. In 2018, the SBC released a total of Php3 billion in debt financing assistance for the sector.


SBC’s P3 program has supported thousands of MSMEs in just two years. Unfortunately, though, the initiative doesn’t suit every business owner. Financing technology companies in the Philippines have stepped in to bridge the financing gap, in which VESL has taken the lead since 2017. Contact us now to learn more about our services. Why not try today? Registration is free, and we offer a pay-per-invoice arrangement for new and old clients.