Credit-hungry Philippine companies face P12-T funding gap

MANILA – Philippine businesses need about P12 trillion worth of credit to enable their businesses to thrive, with small businesses feeling the funding gap more acutely, the U.S. Securities and Exchange Commission (SEC) aims to promote alternative financial solutions through a nationwide roadshow to make up for this funding gap.

Corporate financing needs, the backbone of the Philippine economy, are huge, estimated at $220 billion, according to the International Finance Corporation. Citing a study by the Asian Development Bank, the SEC said only 4.8% of micro, small and medium enterprises (MSMEs) borrow from banks.

“most [small businesses] Relies on internal resources to meet its capital needs. While those applying for traditional bank loans face burdensome documentation, high interest rates and mandatory collateral requirements, SEC Commissioner Carlo Bello said at Friday’s event.

SEC Roadshow

About 1,300 MSME entrepreneurs participated in the Small Business Roadshow held at the SEC's headquarters in Makati City on Friday and streamed online.

Similar to previous caravans held in Davao, Cebu, Cagayan de Oro, Zamboanga and Bacolod, the corporate regulator highlighted other fundraising methods such as crowdfunding, which allows businesses to The platform raises funds from small investors.

“In our ongoing pursuit of financial inclusion, we recognize that there is a real need to expand the financing instruments available to MSMEs,” Bello said.

crowdfunding company

There are three registered crowdfunding companies in the country: Investree Philippines, Seed In Technology Inc. and Eastern Securities Development Corp. (first round). The SEC said that as of the end of 2022, SeedIn alone had disbursed 1.42 million pesos in funding for nearly 300 projects.

Philippine Stock Exchange Chairman Ramon Monzon, who also attended Friday's event, stressed the benefits of listing.

Monzon said that small companies can also choose to list on the SME board, or they can find qualified sponsors to achieve listing goals.

He encouraged companies to consider initial public offerings (IPOs) even if market conditions are unstable.

“There's no right time and there's no wrong time. When you have a great company and your company needs capital, you do an IPO,” he said.

“My view on this is that the IPO price is not the final word. You do an IPO because you need funds, and if you use those funds correctly, the IPO price will be history.

Businessman Lester Yu’s Fruitas Holdings and Balai Ni Fruitas were among the successful listings highlighted at the event.

Fruitas Chief Financial Officer Calvin Chua said the listing was a strategic decision given its expansion goal to cover more Filipino households.

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“For us, we want to make sure we have access to capital, particularly capital markets access, that will help us fulfill our mission,” he said. Inquire

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