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The Budgetarian

Friends, family and online apps: Where Filipinos go when they're short on cash

Jap Tobias - Philstar.com
Friends, family and online apps: Where Filipinos go when they're short on cash
Countless Filipinos have experienced this financial stress over the past two years. In fact, Filipinos are the most stressed, anxious and uncertain about their current financial situation, compared to the rest of Asia-pacific, according to a commissioned report.
The Philippine STAR/File Photo

MANILA, Philippines — While economic recovery is now on its way, the social disruption caused by the pandemic in the past two years has been devastating to Filipinos physically, emotionally and financially.

Pandemic-induced lockdowns shuttered numerous businesses and industries, causing millions of Filipinos to suffer from salary pay cuts and company layoffs, leading to a record-high unemployment rate. At the same time, purchasing power weakened as prices of essential goods kept soaring amid the financial beating everyone was experiencing.

Financial stress in families

"We suffer to find food for our family during the pandemic. Looking for money to buy food and for our everyday expenses is very difficult," 44-year old online seller Joralyn Fuellas told Philstar.com.

A mom to 11 children, Fuellas disclosed that she often ran out of money, which led her borrowing from her relatives and sometimes even from "5-6” lenders.

Another, a Gen-Z events planner who preferred to be anonymous, experienced a 40% pay cut as an effect of the pandemic to the events industry.

“Dahil kulang ang kinikita ko, kinailangan kong maghanap ng ibang paraan para bunuin yung renta ko sa bahay kada buwan,” she said.

Like them, countless Filipinos have experienced this financial stress over the past two years. In fact, Filipinos are the most stressed, anxious and uncertain about their current financial situation, compared to the rest of Asia-pacific, according to a commissioned report.

'Utang': a Filipino coping mechanism

Philstar.com/Efigenio Toledo IV

"When I run out of money for important and emergency expenses, I usually ask for financial help from my father, but most of the time, he just shrugs it off," said Dan Taojo, a freelancer during the pandemic.

Despite its stigma, Filipinos have always resorted to borrowing or pangungutang to augment their financial needs. It has been of help to many in surviving tough times.

According to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, 5 in 10 Filipinos obtain credits from informal money sources, including paluwagan, moneylenders, family and relatives.

Here are some of the ways Filipinos borrow money, as shared by our interviewees:

  1. Borrowing from family and friends

Pro: Lower or no interest rates. You can also negotiate your repayment arrangements.

Con: It can be embarrassing to some and damage relationships.

  1. Fly-by-night lenders a.k.a '5-6'

Pro: A desperate alternative when friends and relatives cannot lend money

Con: 20% interest rate and other unjust charges. Some lenders may also get aggressive when coming after loaners through intimidation or public defamation.

  1. Loans from financial institutions like banks

Pro: 100% legit and usually have cheaper interest rates and more flexible payment terms.

Con: Only 3% of Filipinos who have loans borrow money from banks due to the hard-to-secure requirements and the reality that many Filipinos remain unbanked and do not have a credit history.

Pinoys and lending apps

In BSP's recent Financial Inclusion Survey, 41% of Filipino adults get loans which they use for food (59.5%), school-related expenses (38%) and emergencies (32.7%).

This shows the concept of “pantawid”—be it pantawid-gutom or pantawid-gastos—as the primary reason behind Filipinos resorting to loans. Additionally, these urgent needs pressure financially-challenged Filipinos to look for lenders that can offer loans the fastest and easiest way.

In this regard, a game-changing source of credit is fast becoming popular among Filipinos as continue to embrace technology in their lives. These are online lending apps.

Viable and accessible for many, online lending is available via easy-to-download mobile apps, and can be done with hassle-free loan application requirements.

However, there are still concerns worrying Filipinos, like privacy and the risk of getting scammed, which our interviewees all mentioned.

Making loan apps work for Filipinos

Friends, family and online apps: Where do Filipinos turn when they're short on cash

One of the popular lending apps in the Philippines is JuanHand. Compared to banks, JuanHand promises customers an easier and faster way to process and avail of loans in just a few taps.

Made by Filipinos for Filipinos, JuanHand understands the financial challenges Filipinos have dealt with in the past two years.

True to the spirit of bayanihan, Juanhand wants to lend a hand to those who look for financial aid by offering a dependable service Filipinos can bank on in times of need—a secure, fast and government-compliant service.

Today, JuanHand is introducing improvements to address Filipinos' common concerns and to give them peace of mind when availing the service.

The new and improved app is made more secure. Compliant with the Data Privacy Act of 2012, JuanHand doesn't get confidential information from borrowers without asking for their consent, giving clients peace of mind and control over the information they agree to share.

More importantly, JuanHand democratizes access to loans. Filipinos who are unbanked and don't have credit histories can still avail of JuanHand's cash loans by simply downloading their app at the playstore and providing one Valid ID. They can borrow up to P15,000, repayable up to six months to make paying comfortable.

Available 24/7, JuanHand promises approval of cash loans in just minutes, something very responsive to the urgency of Filipinos' financial needs.

Bayanihan for financial recovery

Apart from assisting with urgent needs, JuanHand can also help Filipinos financially recover from the effects of the pandemic. Small businesses and aspiring entrepreneurs can apply for loans to use as capital for a more stable source of income.

In this economic turmoil, the Filipino community needs bayanihan—a collective sense among Juans and Jauanas that they can bank on each other in recovering.

Borrowing will remain whenever Filipinos are financially challenged, and as long as accessibility of financial services remain unaddressed. Whatever the reasons are for availing of loans, there is comfort in knowing that JuanHand is here to assist Filipinos when they're short in resources.

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