After ASEAN 2017: What’s Next for Philippine SMEs

Micro, small, and medium businesses (MSMEs) are now on the receiving end of more support for growth - thanks to this year’s recent Association of Southeast Asian Nations (ASEAN) Summit! Not only will the ASEAN Business Advisory Council (otherwise known as ABAC) — be providing mentoring opportunities to MSMEs with their ASEAN Mentorship Entrepreneurship Network (AMEN), the nation’s very own President Rodrigo Duterte has also voiced his support for MSMEs.

President Duterte has vowed to re-evaluate the 2018 national budget in order to better accommodate MSMEs. Referring to MSMEs as “game changers,” the President believes these businesses are the “basic unit” of the Philippine economy. His statements are not without grounds, as MSMEs play a significant role in the country’s economy.

As per the Philippine Statistics Authority (PSA), statistical data from 2015 shows that out of 900,914 registered establishments in the Philippines, 99.5% of these are composed of MSMEs. The staggering amount clearly evidences the contributions that these types of businesses make to the Philippine economy and its growth. In terms of employment, MSMEs managed to provide 4,784,870 of total jobs in 2015.

Despite the impressive contributions that MSMEs make to the country’s economic situation, these businesses still struggle within the country’s economic community. Many MSMEs continue to face problems when attempting to access financial resources and loan amenities.

Not all business owners are fortunate enough to get their bank loan application approved. This is apparent when you consider how the Bangko Sentral of Pilipinas (BSP) was unable to make banks comply with the Magna Carta for MSMEs. Reasons for loan disapproval include poor business credit rating, lack of accurate financial records, absence of an organized document management system, not enough cash flow, and lack of feasible business loan. See more here.

It's imperative for business owners to get educated and well-rounded with creditworthiness as a very important issue, and when taken for granted, can affect the business' capability to get financing.

Thus, President Duterte’s recent pledge to assist MSMEs comes as a reassuring announcement for these businesses. While MSMEs struggle to secure business loans, there are options they can consider to improve on their reputation amongst lenders.

MSMEs can turn to CreditBPO to increase their chances of securing a business loan with the approach of increasing their credit rating. MSMEs can raise their creditworthiness and subsequently improve their chances of securing a business loan. Good credit standing will also reassure lenders of a business owner’s reliability in repaying a loan, consequently increasing their credit limit.