Easy SME lending solution to economic growth

A leading development banker said that the solution to the country’s problem is not political systems, but providing a growth environment for domestic entrepreneurs.

"This means having a level playing field, with fair access to knowledge, skills, technology, financing and capital. This also entails creating more enabling services, giving incentives to educational or training institutions, non-government organizations (NGOs), government agencies, private business entities, banks, and encouraging them to make these services accessible to all entrepreneurs, even young students who are potential entrepreneurs," Asiatrust Development Bank president and chief executive officer Dionisio Ong said.

After 45 years, Asiatrust Bank remains a leading proponent for the development of the small and medium enterprises (SMEs) which in turn results in economic development.

"The bank has catered to SMEs long before it was the fad. We have a good history but we have always been conscious of the fact that Asiatrust should constantly reinvent itself to be able to serve its customers in the best possible ways. We will keep up with the needs and demands of the times, improving and changing in a fast changing world." Ong said.

Its continuing thrust is to facilitate the growth and development of SMEs. Ong underscored the importance of SMEs as the engine of economic growth.

He said that Asiatrust fully supports the government in its objective of creating six million jobs in six years through the development of SMEs.

He also mentioned that the biggest problem facing SMEs in Asia, and most especially the Philippines, is the limited access to financing. This is because of the lack of information on SMEs and the banks’ perceived view that there is higher risk in lending to SMEs.

SMEs are discouraged from borrowing from banks because of the high loan floor set by banks, strict collateral requirements, long processing time and high interest rates.

On the other hand, it is imperative that SMEs practice preparation and planning, and that they should be able to explain the whats, whys and hows of their intended business, otherwise it will be difficult for them to be accepted by a bank for financing.

Taking all these problems into consideration, Asiatrust has eliminated a lot of constraints and greatly improved SMEs ability to get bank loans.

It has simplified loan applications and streamlined its lending processes to effectively and efficiently address both SME needs and the bank’s internal risk management criteria.

Asiatrust likewise developed innovative loan and deposit products to address the varying needs of SMEs in the different sectors.

It introduced enabling services through its SME helpdesk where SMEs are assisted in business and financial planning as well as undergoing special training programs. Through its cash management solutions, SMEs are enabled to manage their cash flow better.

Meanwhile, Ong expressed support for plans by the Bangko Sentral ng Pilipinas (BSP) to lift the branch moratorium in certain areas, or scrap the moratorium altogether.

This would not only improve the country’s savings rate (which according to the Asian Development Bank is one of the lowest in Asia at 20 percent) but it will also allow banks like Asiatrust to help more entrepreneurs through its enabling services.

"For each entrepreneur we develop, we can generate around 10 new jobs. This is real "development" of the country and its people – teaching our people how to fish rather than just handing out the fish. This is the only way our development effort can be sustainable," he concluded. – Ted Torres