MSMEs reiterate concerns on united acces to loans

CEBU, Philippines - Amid the efforts of the Central Bank in pushing for financial inclusion, the micro, small and medium enterprise (MSME) sector still laments on the limited access to finance and low usage of financial services due to mismatch between the needs of the small-scale businesses and the supply of financial services.

In a meeting with Senator Paolo Benigno "Bam" Aquino IV last week, members of the Filipino Cebuano Business Club Inc. (FCBI) shared to the legislator their concerns and challenges in accessing loans from financial institutions.

FCBI vice chairman Fred Awe said that a number of MSMEs attempted to apply for loans amounting from P500,000 to P1 million but were declined since commercial banks hesitate to approve such credit.

He said that these banks have to process a targeted amount of loan in a specific period of time, thus favoring those who process bigger loans with lesser transaction costs on the former.

Higher transaction costs, on the other hand, will be required from banks if they grant loans to MSMEs.

He said that although they have the option to acquire financial loans from rural banks, the latter offer higher lending rates than commercial banks.

Awe also shared that availing loans take too much time before it could be given to the entrepreneur. 

He cited his own experience of  applying for loan in a particular bank that took him a year to wait before it was granted to him.

Aquino acknowledged the difficulties of the sector, adding that they deserve the assistance from financial institutions as mandated by the government.

MSMEs make up 99.6 percent of all registered firms nationwide, thus considered to be the backbone of the Philippine economy. The sector accounts for 36 percent of total value-added and employs 61 percent of the workforce. — (FREEMAN)