HOMEGROWN technology firm Thepack Solutions Inc. (Packworks) and micro-finance business 1Sari Financing Corp. has inked an agreement “to provide access to secure, reliable and affordable inventory financing services” to more than 270,000 unbanked sari-sari stores across the Philippines.
In a statement issued last Monday, Packworks explained that under the partnership, sari-sari stores will be able to access a starting credit line amount of P2,500 (about $45.23) through 1Sari’s inventory financing product. The latter will be made available as an in-app service for Packworks’s partner stores. Sari-sari stores can use the credit to purchase goods and bolster their inventory, ensuring they’re well-stocked and ready for customer demands.
There will also be a prompt payment rebate scheme to promote good paying habits for borrowers. Stores can get a rebate of as much as P75 if they pay their dues on time and in full, which they can use for their next availment of inventory financing, according to the Filipino startup.
According to Packworks, the services they would offer are particularly timely as the Christmas season approaches, known to be the busiest time for businesses. By granting sari-sari stores the ability to tap into crucial financial resources, they can proactively stock up and prepare to meet the heightened demand for various items during this festive period. This not only ensures that they can meet customer needs but also harness the full potential of the season’s commercial opportunities.
Packworks Co-founder and Chief Platform Officer Hubert Yap was quoted in the statement as saying that he sees the partnership as “another step forward to tapping the immense potential of over 1.3 million sari-sari stores nationwide.”
“By reaching the unbanked and underbanked, we’re championing the entrepreneurial spirit that drives our nation forward,” Yap said adding that their collaboration with 1Sari “ensures that even the smallest establishments have the tools and resources they need to thrive.”
The partnership aims to address the lack of access to crucial financial tools and support for sari-sari stores, the B2B firm Packworks said. It cited the World Bank as having identified restricted financing access as one of the primary impediments to the growth and development of MSMEs.
“This is despite the Department of Trade and Industry reporting that the MSMEs make up 99 percent of all business enterprises in the Philippines and are responsible for 65 percent of the nation’s employment,” the company said.
The challenges stem from various factors. Stringent requirements from traditional financial institutions often categorize many MSMEs as high-risk borrowers. Given that many of these enterprises are either unbanked or underbanked, they find themselves excluded from vital loan capital, according to Packworks.
Additionally, many MSMEs also lack knowledge about available financial services and how to access them. The lack of access to regulated credit and financing programs also forces them to operate strictly with the cash they have on hand, unable to get loans when they need them, which limits their growth potential.
“Collaborating with Packworks supercharges the expansion and funding of well-deserving, credit-worthy sari-sari stores,” 1Sari Co-founder and Chief Finance and Risk Officer Dindo T. Velasquez was quoted in the statement as saying. “Through their cutting-edge tech platform, we gain the power to deliver inventory financing to previously underserved micro-enterprises with unparalleled efficiency, revolutionizing their financial prospects.”