The oft cited limited funding access as a deterrent for growth of the country’s small and medium enterprises (SMEs) should really be a non-issue currently in light of the excess liquidity flooding the market. Funding supply and demand gap estimates of different agencies vary from a low P70 billion of the Philippine Exporters’ Confederation to a high of P270 billion by NEDA/Philippine Institute for Development Studies. The stark conclusion, however, remains the same: there’s a surfeit of loanable cash that needs to be put to productive use.
So why have these available funds from the banking sector failed to benefit SMEs, where financing may as well be a life-and-death concern? The foremost obstacle is the lack of substantiated "clean” information regarding individual SMEs, making the segment an increased credit risk. In addition, banks favor efficiency; why put in the same amount of effort at probable higher costs to process SME loans when resources are better maximized with larger loans and their equivalent higher returns at a reduced risk?
Solving the Gordian knot to effect social and economic inclusion will involve efforts in multiple arenas, including regulatory for refinements to the Magna Carta for MSMEs and increasing banks’ commitment to social responsibility. Valiant private sector efforts in cooperation with government agencies, however, should hopefully make a tangible dent on this funding distribution issue.
FINEX SME Plus
A few years back, FINEX Foundation for Entrepreneurship (FFEI), the SME foundation of the Financial Executives Institute of the Philippines (FINEX), developed a web-based portal, FINEX SME Plus, with the Department of Trade and Industry (DTI) with the intent of providing an online window that will allow MSMEs to apply for a business loan with participating banks, reach out to other firms for possible synergistic collaboration, and avail of expertise from registered FINEX business consultants in growing their business.
To increase the portal’s ability to respond to MSME basic needs of access to finance, education, and markets, FFEI partnered with Dun & Bradstreet (D&B) Philippines and AIR21 Global, Inc. for a sleeker, muscled revamp of the online window aimed at increasing traction from MSMEs and assisting participating banks in processing MSME loans. For a more intimate grasp of the picture, separate focus group discussions (FGD) were held with participating banks and SMEs.
In the FGD held recently, SME representatives outlined items on their wish list, including wanting to see comparative bank offers, different loan types available with banks’ equivalent document requirements, and downloable application forms and submission function to start off the loan application, among others. To further assist banks in evaluating applicants effectively and to reduce processing time, D&B Philippine President and Air21 CEO, Shiela Lina, expounded on D&B’s intended service of providing MSMEs a certification seal, which will assure banks that the applicant’s information has been properly validated. This should contribute significantly to reducing the banks’ discomfort with spotty MSME information during loan application.
Made for SMEs
More than answering the primary need for funding, FINEX EVP Victor Dela Dingco reiterates that his brainchild, FINEX SME Plus, is envisioned to become a true online community where MSM entrepreneurs can interact for business solutions, find legal assistance through MyLegalWhiz, avail of accounting services through the Philippine Institute of Certified Public Accountants (PICPA), consult with various business specialists from FINEX, and avail of educational resources. The FINEX SME Plus revamped portal will be launched in the Third FINEX SME Forum in July 15, 2015 at the Dusit Thani Hotel Makati. Admission is free.
Given that 99.58 percent of business enterprises operating in the Philippines are classified as MSMEs, which employ nearly two-thirds of the labor force, MSMEs are a considerable market given the right business model. In the long run, the FINEX SME Plus online portal is envisioned to tangibly contribute to furthering the MSME’s role as a multiplier for economic and social benefits.//
Evangeline Navarro is a serial entrepreneur and investor, a finance teacher; and a student at heart on how money and resources affect people. She can be contacted at evangeline.navarro@gmail.com.
