Significance of steady credit for micro enterprises | The Exchange - video Dailymotion

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Your business is our business.   Micro enterprises need all the support they can get to strengthen their business fundamentals and eventually expand operations.   Let's now have an exchange with Allan Robert Sicat of the Microfinancing Council of the Philippines.   Join our senior anchor Rico Hizon on The Exchange.  Visit our website for more #NewsYouCanTrust: https://www.cnnphilippines.com/  Follow our social media pages:  • Facebook: https://www.facebook.com/CNNPhilippines • Instagram: https://www.instagram.com/cnnphilippines/ • Twitter: https://twitter.com/cnnphilippines

Transcript

00:00 From news and views, issues and opportunities, we'll have in-depth conversations with decision

00:06 makers to find out what they know and what they think.

00:10 I'm Rico Hizon, inviting you to join the exchange because your business is our business.

00:17 Micro, small, and medium enterprises are the backbone of the economy, giving opportunities

00:25 for investors and providing employment.

00:28 These businesses easily adjust to the times as they continue operations in and out of

00:33 season providing much needed jobs to our kababayas.

00:38 From funding to financial advice, the private sector assists small owners in doing business.

00:44 The vision of TaylorFit Financing in our C-Suite Vision.

00:49 Micro enterprises need all the support they need to strengthen their business fundamentals

01:05 and eventually expand their operations.

01:08 Let's now have an exchange with Alan Robert Sikap of the Micro Financing Council of the

01:14 Philippines.

01:15 Alan, great to have you with us.

01:16 Briefly, what is microfinance and how different is it from banks' standard financing services?

01:25 Thank you Rico.

01:26 So microfinancing or microfinance is the provision of a broad set of financial services including

01:32 credit, micro-savings, micro-insurance to poor and low-income households to be used

01:39 for their businesses.

01:41 So the main difference between microfinance loans compared to other loan products being

01:47 provided by banks is that microfinance loans are non-collateralized, simplified loan procedures

01:54 and shorter loan repayments.

01:57 So what are the requirements for a micro enterprise to borrow from microfinancing groups?

02:10 The minimum requirements would be of course you have to have a small business because

02:14 small business will enable you to have cash flow to be used to pay for the microfinance

02:21 loan.

02:22 So basically the requirements are very simple.

02:26 There is no need for government issued IDs.

02:29 You just need the barangay clearance or barangay certification to be able to access a simple

02:35 microfinance loan, Rico.

02:37 And what is the maximum amount they can borrow and what are the terms?

02:42 The maximum amount is 300,000 pesos but normally the average loan size in the Philippines is

02:49 around 8,000 to 10,000 pesos, Rico.

02:52 And how often can a micro business borrow?

02:58 In terms of repayment, the repayment schedule will be a year.

03:03 So they can pay it a maximum of 12 months but normally the loan term is around 3 to

03:10 4 months.

03:11 So in a year, a microfinance client can borrow 3 or 4 times depending on the repayment schedule

03:18 that they choose.

03:19 And what if they cannot pay you back?

03:23 If they cannot pay you back, of course there will be some options like rescheduling the

03:28 loans.

03:29 Rescheduling is a way for the microfinance institution to help the client to be able

03:34 to pay the loan if they are not able to pay the loan on time.

03:38 So rescheduling or refinancing is another option, meaning they will provide you another

03:44 loan so that you can recover from your repayments and your business.

03:49 Rescheduling, repayment, does this also entail higher rates?

03:56 Well, it depends on the microfinance institution but normally there will be no higher rates,

04:04 Rico.

04:05 And for micro enterprises who are watching us right now, what are the standard rates

04:09 that microfinance companies offer?

04:13 Well, it depends on the microfinance institution but the range of rates will be between 2.5%

04:22 to 3% per month.

04:26 So if it's 2 to 2.5%, so basically that's close to 24 to 30% a year.

04:33 Yes, that's correct.

04:35 And most of the time, what is the repayment?

04:38 Is it 95%, 80% of these micro enterprises that pay back to their microfinance companies?

04:46 Well, you would be surprised, Rico.

04:52 So the repayment is very high.

04:55 It ranges between 95% to 98%.

05:01 And what is the demand now for microfinancing, especially amid the rising prices, Alan, of

05:07 goods and services?

05:09 There has always been appetite for loans and other financial services among micro entrepreneurs.

05:13 So in terms of growth, our data indicates that demand for loans in terms of loan portfolio

05:19 of MFIs increased by 24% from 2021 to 2022.

05:23 While in terms of number of clients, outreach also increased by 8%.

05:29 In the previous period, 2020 to 2021, loan portfolio increased by 15% while the number

05:35 of clients also increased by 12%.

05:38 So you can see here that there is always demand for financial services, particularly loans.

05:43 So these levels, although still not the same level before the pandemic, they are now almost

05:49 at the same levels pre-pandemic.

05:51 So this figure shows that there are increasing number of Filipinos engaged in micro businesses

05:56 and they are willing to engage with financial services, particularly loans.

06:01 Thank you so much for this Enterprise Credit Exchange, Alan Robert Sikat of the Microfinancing

06:07 Council of the Philippines.

06:10 Every now and a week's top business stories, President Bombo Marcos suspended the implementing

06:13 rules of the Mahalika Investment Fund Law pending further review, but he clarified the

06:19 fund will still be operational by year's end.

06:22 The Banco Central ng Pilipinas reports a balance of payments deficit of $414 million in September,

06:29 and this is the widest differential since June.

06:33 And Filipinos sent home $3.1 billion in August.

06:36 The Central Bank says this is higher by almost 3% year on year.

06:42 And straight ahead on the exchange where your business is our business.

06:46 How accessible are loans to small businesses and entrepreneurs down to the barangay level?

06:52 We have an exchange with the LAMAC, Multipurpose Cooperative of Cebu.

06:57 And many small businesses have the potential to grow, they just need loans to get started.

07:02 Microfinancing joins us straight ahead right here on CNN Philippines, news you can trust.

07:09 [MUSIC]

Significance of steady credit for micro enterprises | The Exchange

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