Banks urged to grant credit card to micro-entrepreneurs

CEBU, Philippines - While access to capital continues to hamper the growth of micro-entrepreneurs, businessman Glenn Soco urged banks to tap this particular segment and provide them with credit card access.

Soco said this is one of the best ways to protect micro-entrepreneurs, including sidewalk vendors, sari-sari store owners and wet market vendors from being victimized by illegal loan sharks.

Banks are now very aggressive in providing credit cards to employees with only employment certificates and pay slips as major requirements, so why not  provide the same to  small business operators?

According to Soco, despite the pronouncement of banks that they have excess capitals for loans, micro-entrepreneurs are still struggling to get financial help from legal entities like banks.

If the banks worry about the capacity of the small business players to pay, they can easily partner with the Local Government Units (LGUs) as guarantor. In this way, LGUs will be able to help the small businesses in their locality, rather than pushing them to borrow capital from individuals who charge higher interests like the 5-6 scheme,   Soco explained.

If these small business players can pay religiously their loan from illegal lenders, there is no doubt that they can pay their credit card bills, Soco said.

With low interest offered by the banks today, granting a credit line of at least P10,000 to P50,000  to small business players is already a big opportunity for them to expand their businesses.

Soco, who is  a member of the board of the Mandaue Chamber of Commerce and Industry (MCCI) said that the SMED (Small and Medium Enterprise Development) Council should lead in addressing this concern. A body has to be created to help micro players get access to capital and exposure to technology. 

Likewise, 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 continue to offer intimidating loan packages.

Aldeguer cited a recent survey wherein budding entrepreneurs and students who want to enter in into entrepreneurship were asked where they would get capital, the bank is  not in the top five choices.

“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 into consideration by the banking sector, specifically that the Philippines need to pump up its economy to sustain growth amid the fragile economic global condition.

According to Aldeguer, there is a need for banks to re-examine and understand the changing needs of today’s entrepreneurs.

The new breed of entrepreneurs are very dynamic, they have different capitalization requirements as they come from diverse family background. Thus, banks  should also be as dynamic as they are, Aldeguer said. (FREEMAN)