UnionDigital Bank, Inc. (UD), a subsidiary of UnionBank of the Philippines, is ready to launch its microloan program with the Social Security System (SSS) this 12 months, with micro, small, and medium enterprises (MSMEs) in a position to apply for capital, in keeping with a UD official on Friday.
“(As for the) goal date, I can’t really say yet. All I can say is it’s coming soon. Very, very soon… inside the 12 months,” Kimberly Dy-Tenchavez, head of brand name and communications for UD, told reporters throughout the Hapinoy Caravan.
SSS LoanLite, officially introduced last September, is a micro-lending program for eligible SSS members that gives loan amounts between P1,000 and P20,000. Its repayment terms range from 15 to 90 days.
This system seeks to present members an accessible and convenient option to access lending, as the applying and loan disbursement process is fully digitalized and will probably be available through the UnionDigital banking app. Funds may additionally be disbursed through the MySSS Card.
“The approval for that can undergo the same old approval process handled by SSS and in addition UD,” Ms. Tenchavez said.
SSS LoanLite carries an 8% rate of interest every year and a service fee, in keeping with the SSS website.
The upcoming launch of the micro-lending program is one in all UD’s responses to the persistent challenge of MSMEs in getting access to capital, Ms. Tenchavez said.
Access to capital stays one of the vital glaring challenges faced by MSMEs, especially sundry shops, locally called sari-sari stores, said Mark Joaquin Ruiz, president and co-founder of Hapinoy, a nationwide grassroots community network of over 70,000 micro entrepreneurs, nearly all of whom are sundry shop owners.
“Should you ask what a sundry shop real concern is… it’s really capital,” Mr. Ruiz told BusinessWorld throughout the caravan.
“Because right away, many still depend on 5-6, which has extremely high rates of interest,” he said, noting that the SSS LoanLite program is a game changer for MSMEs.
MSME loans accounted for less than 4.73% of the banking system’s P12.143-trillion loan portfolio, net of exclusions, as of March, in keeping with the Bangko Sentral ng Pilipinas.
This was below the ten% lending allocation previously required under the Magna Carta for MSMEs, which mandated banks to put aside 8% of their loan portfolio for micro and small enterprises and a couple of% for medium-sized businesses. The mandatory credit allocation expired in June 2018 and has yet to be reinstated.
Aside from the upcoming SSS LoanLite program, UD can be working with Hapinoy to launch a loan product that will probably be rolled out much later, Ms. Tenchavez said.
The recent Hapinoy Caravan, held in Novaliches, Quezon City, was a collaboration between Hapinoy and UD that helped nearly 300 sundry store owners develop into more financially and digitally literate. — Edg Adrian A. Eva