It’s the widening deficit, stupid!

Bank notes 1: That there have some pretty things – mainly from within – being said about United Coconut Planters Bank’s newly appointed president and chief executive officer Jose Querubin can largely be traced to his being the new kid in the block.

Those talks should stop after Jojo Querubin and the rest of the bank get to know each other better.

The thing to remember is that both Mr. Querubin – a decent man who also happens to know his banking alphabet backward and forward – and everybody in UCPB want the bragging rights of being one of the industry’s big three.

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Bank notes 2: One sure way to rile the normally unflappable Finance Secretary Jose Isidro Camacho is to pinpoint the country’s increased borrowings under his stewardship as a major concern.

For Lito Camacho, it’s the widening budget deficit, stupid! Because the country spends more than it earns, it has to borrow more and more just to stay in place. Said another way, the amount we borrow every year must not only cover the interest payment on existing loans but also to keep government services at, mind you, current operational levels.

In a way, Mr. Camacho’s speech – which details the roadmap of the country’s economy – before the Rotary Club of Manila is a personal one.

He, not his speechwriters, drafted and corrected that speech.

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Small Business Corp. president Benel Laguna has a problem that anybody with a product or service to sell would be happy to have – too many clients. In SB Corp.’s case, these are loan applications which are normally processed within a month but are now taking twice that time to release the check.

This agency of the Department of Trade and Industry has lent out P900 million in the first six months of 2003. In comparison, it lent about P1 billion for the entire 2002.

By the way, Mr. Lagua is currently piloting a financing program for government employees, using their unused leaves as collateral, with DTI agencies. The idea here is to help government employees start businesses of their own before retirement.

One of SB Corp.’s more popular financing program involves franchising.

Under this program, first-time entrepreneurs or those with no business track record can borrow the operational cost of putting up a franchise.

Here’s the deal.

• The franchisor must be either a member of the Philippine Franchise Association headed by Alegria Limjoco and the Association of Filipino Franchisors Inc. headed by Teresa Laurel. As everybody knows, members of the PFA are the big boys such as Tony Tan Caktiong’s Jollibee Food Corp. (whose franchise fee is said to be a whopping P30 million) while AFFI members such as Jose Magsaysay Jr.’s Potato Corner prefer the cart and kiosk business models and offer a franchise fee of less than P500,000).

• The franchisor is the co-guarantor of the franchisee/borrower. This means that if the franchisee/borrower defaults on his/her loan, the franchisor takes over and pays the SB Corp. loan.

• The SB Corp. loan covers only the operational cost of putting up the business such as rentals (security deposit and advance payments) and equipment. The franchisee/borrower must raise the franchise fee from other sources.