The greater bulk of entrepreneurs in the country is a sorry bundle of confusion on the matter of obtaining funds from banks and that the various lenders have only themselves to blame for failing to make the situation better, according to the Association of Filipino Franchisers Inc. (Affi).
Among small and medium-scale enterprises (SMEs), for example, only four of 10 SMEs have knowledge or understanding of what bank financing entails for themselves and the business they are promoting.
Against this background, Affi Founder Ricardo Cuna, who owns the Fiorgelato ice cream franchise and himself a banker, urged business colleagues to simplify their lending procedures and make it easier for borrowers to obtain a loan.
“We want for the banks to make it as easy and as simple as possible for the entrepreneurs because many of them hesitatate in going to a bank. We, at Affi, encourage them to go to financial institutions. There’s a big market for the banks to capture the SMEs,” he recently told the BusinessMirror.
Citing his own experience, he said only four out of 10 applicants know and understand banking services.
But as far as he can tell, this sorry state of things should not be a problem as this also represented an opportunity for the lenders to exploit.
This is really a huge opportunity for the banks to exploit and was excited by the prospect of the industry to expand by another 15 percent to 20 percent this year alone.
According to Cuna, some SMEs even project growth as high as 30 percent he added.
With the expansion of SMEs, the banks have to meet their requirements to achieve further growth, and in order for them not to turn to other sources of financing.
He also said SMEs lament the fact that lenders charge industry members interest rates averaging 12 percent for a typical loan which they consider as too high for their collective taste.
According to Cuna, interest charges no more than 8 percent should be just right.
He said Affi member-franchiser investments typically range from P150,000 to P8 million and project a return on the investment to come within two years.
Of the 165 Affi members, 55 percent are in the food business, while 45 percent are in the service sector.
He said the Affi wants nothing more than the success of the various Filipino entrepreneurs as the region begins to integrate under the roof of the Asean they wanted to ensure success of Filipino entrepreneurs in the face of the Asean integration and the rapidly increasing competition.
Cuna has lauded their partner BPI Family Savings Bank for giving AFFI access to banking services and for giving his franchising colleagues flexible loan terms.
“As what Mr. [BPI Family Vice President and Division Head of Product Marketing] Noel Altamirano said, we are here to help entrepreneurs grow their business,” he said.