MSMEs to have access to financing - Chamber

CEBU, Philippines - Micro and small entrepreneurs, specifically members of the Cebu Chamber of Commerce and Industry (CCCI) will soon be able to avail of direct financing, as the chamber vowed to work with the Development Bank of the Philippines (DBP) and other funding agencies to promote “venture capitalism” in Cebu.CCCI president Prudencio Gesta made this announcement admitting that although banks are offering their hands for corporate loans, sometimes, the rules of other financial institutions are “unfair” to new and budding entrepreneurs.

“We’ve seen the handicap of new entrepreneurs in getting additional investments for their (potential) businesses,” said Gesta adding that CCCI will be partnering with DBP and the Department of Trade and Industry (DTI).

One of the considerations is to install an effective “venture capital” mechanism to be led by the CCCI, in cooperation with capitalists and interested financial institutions, Gesta said.

He said the chamber is going to strengthen the programs under the SME (Small and Medium Enterprises) Council.

If this plan will push through, Gesta said the facility will be an avenue for start-up or the budding entrepreneurs to get capitalization, without having to comply with a number of requirements.

Access to financing has been the battlecry of micro-entrepreneurs, including start-up businessmen in order to pursue their potential business concepts. Unfortunately, some banks require large collateral assets, among other requirements that are impossible for new entrepreneurs to comply.

Recently, Asian Development Bank country director Neeraj Jain said what is not available in the Philippines, despite its potential to encourage entrepreneurship is the availability of “equity financing”. What is common though, Jain said is the “debt financing.”

Some good inventions for instance, cannot succeed if there is no financial back-up, as well as further assistance for research and development (R&D), that is supposedly be provided by the government, Jain said.

Meanwhile, Economists had been saying that the Philippines have an excess liquidity, or un-spent income of about P1.7 trillion, larger chunk of this funds is now being distributed by banks to provide the strong demand for consumer loans.

While the appetite of the corporate sector to get financial resources from the banking institutions, economist Eduardo R. Banaag Jr., investors these days have wider options for capitalization requirement, while the capital market in the country is taking off.

This means, that aside from banks, corporations can now borrow directly from the public through issuing security bonds, and other financial access alternatives.

The reason, most banks in the Philippines now are more active in providing attractive packages for consumer loan products, particularly real estate.

On the other hand, Cebuano entrepreneurs continue to call the banking sector’s attention in opening widely their financial resources to the MSMEs, in order to get their required capitalization for planned expansion, and new business ventures.

Entrepreneur Jay. P. Aldeguer, believes that there is still a huge gap between the banking sector and the business players specifically the SMEs, and the start-up companies, as banks continued to offer intimidating packages, and can only attract bigger companies.

Aldeguer mentioned that the reality now is start-up business in the Philippines do not regard banks as supportive to entrepreneurship, as capital resources are mostly borrowed from parents, and friends.

“Banks are still maintaining intimidating factors. Clearly, there is a huge ‘disconnect’ between the financial institutions, and the business sector,” said Aldeguer adding that this problem should be taken in consideration in the banking sector, specifically that the Philippines need to pump prime its economy to sustain growth, amid the fragile economic global condition. (FREEMAN)