Funding still a problem for small PHL businesses

PHILIPPINE micro and small enterprises are having a hard time meeting the requirements from government and private lenders, the Philippine Chamber of Commerce and Industry (PCCI) said on Monday.

PCCI President Enunina V. Mangio said these entrepreneurs often lack the capacity to produce documents showing their capacity to pay.

“Our microenterprises don’t have financial statements,” she told a news briefing. “They don’t have the documents needed by the banks and Small Business Corp. (SB Corp.) to avail themselves of the financial programs.”

Even small corporations encounter the same problem, she pointed out. Once banks see that they have a negative or very low net income, their loan application will get rejected, she added.

Ms. Mangio said that some loan applications are being shut down without them being able to share how they plan to expand their business.

SB Corp. is an attached agency of the Department of Trade and Industry that provides financing to micro, small, and medium enterprises (MSME) in the Philippines.

On its website, it lists government-issued IDs and permits, proof of sales, proof of value of fixed assets, and financial statements filed with the Bureau of Internal Revenue showing positive income in the past years as requirements for first-time borrowers.

This presents a problem since most microenterprises are in the informal sector, PCCI Vice-President for International Affairs Jude Aguilar told the same briefing.

“We all agree that 99.5% of our businesses are MSMEs. Out of the MSMEs, 90.5% are microenterprises, 8.6% are small and 0.4% are medium-sized,” he pointed out. Of all the country’s microenterprises, more than 80% are in the informal sector, he added.

He said there is a push from the Trade department to encourage microenterprises to move to the formal sector.

“Because when they do that, they will have access to financing, and they will be able to apply for benefits for their employees, but of course, that is expensive,” he said.

“And how do you get financing when you are in the informal sector? Maybe they can, but it will have larger interest rates,” he added.

Trade Undersecretary Blesila A. Lantayona said the agency seeks to create more focused training programs to help MSMEs learn how to prepare financial statements.

“Our MSMEs should be trained also, and that is where we can have collaboration on the ground,” she said. “They have to be trained on how to prepare simple financial statements.” — Justine Irish D. Tabile

Funding still a problem for small PHL businesses
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