Entrepreneurs: To avoid 5-6 lenders, stay above board
About four years ago, I wrote about “taxing tax evaders” who are conspicuously plying their trade on our streets. They are our street entrepreneurs a.k.a. sidewalk vendors. These entrepreneurs are selling their wares, like bootleg DVDs, fake designer-garments, etc., on the streets.
These items, depending on where these are made or plagiarized, find their way to the Philippine market either through wicked importers or smugglers. These items are undocumented and sneaked into the country through the backdoor. Since legitimate business establishments demand for BIR registered receipts, these items seldom go through the normal distribution channels like department stores or specialty shops. Finding difficulties through legitimate channels, these unscrupulous beings found some advocates in our sidewalk vendors.
Incidentally, calling them sidewalk vendors isn’t degrading but an understatement. It is a fact that most of them have entrepreneurial smarts. They are selling their wares on the streets by choice and have only preferred to be labeled as such (sidewalk vendors) to justify their tax-free existence. Most of them never went for employment because they chose to become employers themselves. Sadly, despite all these opportunities, they have remained tax-free.
Likewise, there are motorcycle-riding Indians who ply their lending businesses from one stall to another on a daily collection basis. Ironically, these tax-exempt individuals are using roads that are built and maintained by honest taxpayers’ money. Through the manner by which they carry out their businesses, interest charges are certainly higher than banks, pawnshops and lending investors. Yet, they never drop even a single cent to our government coffers.
Why do these 5-6 Indian lenders thrive despite such huge 20 percent per month interest? The answer is too simple. Their customers, who are mostly micro and small entrepreneurs, are non-bankable.
Thus, the Department of Trade and Industry’s proposal to set aside P1 billion starting this year to implement a better lending scheme with a more reasonable and affordable interest rate for micro and small enterprises is, indeed, laudable. With such lending scheme, small entrepreneurs may no longer have to borrow from these loan sharks.
Moreover, Joel Mari S. Yu’s (Cebu City government consultant for economic and business) proposal to develop a pool of "Angel Investors" or "Venture Capitalists" to provide a formal credit facility to small businesses is, likewise, laudable. True enough, we have so many rich people in Cebu whose money are just sleeping in the bank and earn meager interest.
Educating these rich Cebuanos though about the prospects of “Venture Capitalism” or having a pool of “Angel Investors” in Cebu could be a big challenge, yet, doable. For one, there is already one such group that actively supports budding entrepreneurs in Makati, the Philippine Venture Capitalist Investment Group. Thriving since 1987, this group has been holding its investors’ and business owners’ successful pairings at the Asian Institute of Management every last Thursday of the month. Some of these moneyed individuals are investing for profit, while others are doing so simply out of their own sense of social responsibility.
However, granting that these facilities maybe realized, some of them (small entrepreneurs) may not be able to benefit at all. As we all know, most of our micro and small enterprises would prefer to go underground for one reason or another (probably, to evade taxes, among others). Due to their preference to go underground, they have no valid evidences (Taxpayer’s Identification Number, income tax returns, business permits, etc.) of their existence. Thus, if nothing positive is done, they shall remain non-bankable.
Therefore, it is about time that we should help these entrepreneurs stay above board. Strengthening the Barangay Micro Business Enterprise program can be one of those options the government must pay attention to.
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