NextGen Day

According to a digital bank executive, micro-businesses must have financial access to succeed.

To give loans to the over 1.3 million neighborhood convenience businesses, known in the Philippines as sari-sari stores, UNO Digital Bank and 1Sari Financing Corporation have teamed up.

In response to emails from the Philippine News Agency on Wednesday, Manish Bhai, the chief executive officer and founder of UNO Digital Bank, said: “Lending to micro-retailers is an uncharted territory, but we feel this is a hugely underserved segment that deserves access to formal credit.”

These convenience businesses, according to him, “operate on a very cash-dependent day-to-day basis.”

As a result, he explained, “if they run out of cash, they won’t be able to replenish inventory, which will result in lower sales.”

According to Bhai, the current predicament “is an endless cycle that, if not properly managed, can lead to the closure of the business.”

He continued, “Suppressing loan access to this segment will have an impact not just on the barangay (village) level but also on the national level because SMEs (small and medium companies) contribute considerably to our local economy.

As part of their collaboration with 1Sari Financing Corporation, Uno Digital Bank plans to offer loans to owners of sari-sari stores to reduce their dependency on unofficial funding sources.

According to Bhai, only about 11% of Filipinos borrow money from banks and other conventional financial organizations.

“We want to increase that figure. We consider credit inclusion to be a crucial component of financial empowerment.

He declined to provide specifics on the projected loan disbursements for the year. Still, he did say that they planned to extend loans to the Laguna, Batangas, and Cavite regions where 1Sari Financing Corporation presently conducts business.

Even though they know the dangers of lending to small firms, Bhai added, “There is no better way to learn more about this underserved market than to get our feet wet.”

“At the end of the day, we always have our credit policies, which ensures that we have sound and prudent credit risk management in place,” he continued.

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