Question & AnswerQ&A (DSWD ADMINISTRATIVE ORDER NO. 03, S. 2007)
The main objective is to provide credit assistance to non-farm enterprising poor in areas lacking micro-lending services, augment their family income, enable sustainable income-generating activities through necessary services, and develop responsible users of formal lending services.
An individual borrower can avail a minimum loan of 5,000 PHP and a maximum loan of 50,000 PHP.
Loans carry an interest rate similar to QUEDANCOR's rate of 24% per annum or 2% per month, computed using the flat rate or straight line method.
Eligibility requires passing the Means Test, residing in 47 unserved municipalities or designated barangays, being physically fit and interested with an ongoing income project, residency in the community for at least six months and intention to stay for at least two years, being at least 21 years old (16 with parental consent), willingness to abide by project rules and accept assistance, and good community reputation.
The organized group acts as co-maker or guarantor for an individual member’s loan; the borrower signs a waiver allowing application of savings against the loan in case of default.
Participants must mobilize savings totaling 20% of the loan: 10% as equity capital build-up, 7% as emergency fund, and 3% as operational fund.
Loans of up to 20,000 PHP must be repaid within one year; loans exceeding 20,000 PHP have a maximum two-year repayment period, with weekly or regular payment schedules.
A penalty charge is imposed for late payments, to be determined upon consultation with group members; incentives such as interest rebates and loan benefits encourage on-time payment.
Coordination involves DSWD offices, Local Government Units (LGUs), People’s Organizations, Non-Governmental Organizations, National Government Agencies, and other interested entities.
Required documents include an application form, project proposal, loan affordability analysis, amortization schedule, promissory note, and borrower picture.
The Field PEO conducts borrower interviews, home visits, assesses project feasibility, partners with LGU workers for proposal preparation, monitors loan utilization, and supports technical assistance and social preparation activities.
Repayment collections occur on a weekly or regular basis during group meetings, beginning a week after the loan release.
Apart from penalties for late payment, withdrawal from savings for capital build-up is restricted until full repayment, except for meritorious reasons such as emergencies.
Weekly monitoring is conducted for the first three months and monthly thereafter; financial and program implementation reports must be submitted monthly and quarterly respectively to DSWD Central Office.
It involves group sessions to increase self-awareness, positive work attitudes, social responsibility, and understanding of economic self-reliance.