Why They Do Not Lend Money To I-Cafés
I attended “eNabling the eNtrepreneurs”: An SMB ICT Forum last July 2, 2010 at Crowne Plaza Galleria Manila and it was there that I was able to confirm that financing institutions are not granting loans to ordinary i-café owners. The forum was organized by Intel Technology Philippines and attended by owners of micro, small and medium-sized businesses with some thirty (30) i-café owners among them. The financing and/or lending institutions made their presentations in the afternoon about the various loan products that they offer to entrepreneurs.
In the open forum, I stood up and ask about the standing or rating of i-café owners in their loan portfolios. I inquire if they are granting loans to i-café owners who need them either to start and/or expand existing business. I am sorry to report here that the reply was negative. They do not anymore extend loan for i-cafés because previous borrowers who are engaged in the business were not able to repay their debts. However, the respondent from the financing institution said they may consider lending money for an i-café expansion provided the owner can provide verified data showing his capability to repay the loan from the proceeds of his existing business.
Why do financing institutions do not lend money to i-cafés anymore? Aside from the failure to repay that the lenders experienced in the old loans that they granted to i-café owners, we can conclude that the very fast obsolescence of computer equipment is another reason why it is practically impossible to secure a business loan for an i-café. I want to add the non-transferability of software ownership as another reason.
Is there something that i-café owners can do to increase the credit rating of i-café business with the financing institutions? Yes, there is. Those who are really making money in the business must file accurate returns and pay the correct taxes. This is the only way that the financing institutions can determine if it is worth lending money to deserving i-café owners.