Access to bigger loans with low repayment amounts and long payment periods gives self-employed microentrepreneurs (SEME) the means to expand their business operations, said BanKo president Jerome Minglana.
Minglana cites 42-year-old Mylene Sanchez who was able to grow her business selling coconuts in carts. Through her BanKo loan, she grew her carts to 12, hiring extra hands as vendors. She was even able to put up a small sari-sari store in her home. She now earns P8,000 a week and an additional P1,000 daily from her store.
Another example is Leticia Reyes, who used her BanKo loan to purchase additional sewing machines and to fix her place of business. The 63-year old, who gets jobs to sew pre-cut pieces of garment, now has five employees and earns P10,000 a week, 10 percent more than what she used to make.
Profile of an SEME
BanKo typically gets applicants who are 30 to 40 years old on average from the broad C income bracket, a mix of both college and non-college graduates. They usually need funding either to expand their existing business or, if their existing business is relatively stable, to invest in another business venture.
Minglana said that the interesting thing about these clients is that even if their businesses are small, they take the opportunity to diversify. “For those who are more successful in their businesses, they are very hands-on. The owners themselves stay in their businesses. It is rare that we see owners of businesses who are also employed,” he said.
Fifty percent of BanKo borrowers fall under the wholesale-retail category, but businesses in the food and manufacturing sectors are also being serviced.
Though there is no need for collateral or financial statements to avail of loans from BanKo, Minglana advises businesses to observe good business practices. BanKo, as a financial institution, also needs to gauge how the business is doing.
Minglana lists the following pointers for micro entrepreneurs:
- Get some form of official permit, like a barangay permit or a mayor’s permit.
- Have an official place of business.
- Have a record of business transactions, such as a simple log of daily sales and expenses.
- Have at least some form of savings.
Minglana said BanKo not only looks at the capacity to pay, but also the character of a potential client. “We ask questions that pertain to their lifestyle, as well as how they are perceived in the community and in the market they operate in,” he said.
For BanKo borrowers, they are able to save because of the lower funding costs. “The money that they save is brought back to the business for expansion, or saved by our SEME clients for emergencies,” Minglana said.
“If we are able to provide funding, and if the microentrepreneur himself realizes that he can save more by getting a loan from us, then he can expand, produce more, and employ more,” Minglana said.