Micro-Lending Project 2013-14

March 26, 2013 to November 23, 2014

Market location: Bacolod City
Target Groups: DAR Employees, Call Center Agents-Convergies
(See database for detailed info and sophisticated tracking system)



For Investors
WHY INVEST?
By investing, you share actually in financing positive change by helping the community.
Investors who want to make a positive social impact accept a below-market return after 3 months,
typically 3 to 6 percent, depending on the amount and time invested.
Investments range from a minimum of P5,000 to P10,000 or more, where the main purpose of this
project is to find investors who are individuals and families who want to help communities where
people thrive and at the same time profit from their humble investment.

Micro Lending

One of the hottest trends in finance today is micro lending. This is the lending out of small amounts
of cash, usually without collateral. The concept has been adopted successfully by both profit and
non-profit organizations, especially cooperatives. Millions of people have benefited from access to
the loans provided by micro lending companies.

Micro lending has caught on even with banks and other financial institutions that previously
thought it was not feasible. It turned out that most of the small time borrowers were also good
payers, and since the interest rates were higher than the usual mark-up of banks or financing
companies, the practice became attractive to small time lenders.

Articles Considered

Locate in a secure place near your market. For practical reasons, it is usually best to be located
near your target market. Security must also be a consideration because you will be handling cash,
so being near a bank would lessen the risk of robbery in transit.

Incorporate your company with the Securities and Exchange Commission. Cooperatives,
however, are registered with the Cooperative Development Authority. The current law does not
allow sole proprietorships or partnerships to go into the money lending business (For Companies
and High end businesses).

Have sufficient capitalization. There must be a minimum paid up capital of P1 million. In actual
practice, how you allocate your capital will affect the viability of the business. Conserve on expenses
like renovation and expensive furnishings, as this will allow you to have more funds available for
lending out (For Companies and High end businesses).

Be knowledgeable of the laws governing the business. You must know and comply with the
laws pertaining to the micro lending business. The most important is the Lending Company
Regulation Act of 2007. To be able to apply this, you must also read the implementing rules and
regulations of the laws. Some of the other relevant laws are the Truth in Lending Act and the
Consumer Act. (Latter should be taken point)

Learn how to compute the amortization and documentation of loans. This is important so
that your customers will be billed correctly and you get the right margin. Proper documentation of
the loan is critical later on when you have to take legal action in order to collect.

Be careful in screening clients. The best way to reduce losses due to bad debts is to avoid poor
payers in the first place. To do this, there must be a thorough credit investigation to assess
character. Collateral must be treated only as a secondary remedy because of the long and difficult
process of foreclosing. (Important)

Take advantage of the small claims court. To minimize your collection expenses, you should
pursue bad debtors in the small claims court. This court will save you money in legal expenses
because lawyers are not allowed in the proceedings. However, the court will only hear cases if the
original principal amounts to not more than P100,000; but almost all loans in micro lending are
below that amount anyway.

There will always be a big demand for small loans, and the micro lending entrepreneur is well
placed to cater this need.

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach,
Inc.)


10 Reasons Why Filipinos Dont Succeed in Business
May 7, 2013 by Victorino Abrugar at Business

Its great to have a business. Its challenging to be in entrepreneurship. In our country, we need
more business people and entrepreneurs to provide more jobs, generate more output, and grow
our economy. However, entering into business and entrepreneurship is not an easy task but rather
its a tough job. In the Philippines, businesses, especially micro, small and medium enterprises,
dont have a long life expectancy. Most of them would fail in less than 5 years for several reasons.
The following are some reasons why I think there are Filipinos who dont succeed in business or
entrepreneurship in our country.

1. They are not sincere in doing business. Passion and hobby is two different things, and we
know that we need passion to succeed in business. When you are passionate in your business, you
give your dedication to your business. You give most of your time to your business and you even
make great sacrifices for it. Perhaps, a number of entrepreneurs misunderstand that hobby and
passion are the same but theyre not. You only give your extra time to a hobby, while you give full
time and even beyond that time to your passion. Many Filipinos fail in business because they only
consider their business as a hobby and not a serious business.

2. They dont want to invest more money. People do business because they want to make money
so why spend more money if they are already making some money? Many business owners in our
country dont want to let go of their cash and take the risk of investing more in their business.
Because of this, income opportunities leave them. This also causes them to ignore opportunities to
grow or expand. And because they cannot grow, they are easily beaten by their competitors who
are always expanding.

3. They are afraid to innovate and experiment. Another reason why there are Filipinos who fail
in business is that they dont want to invest more time for innovating and experimenting. To
succeed in business, we have to think for the long term. We have to make our businesses and
enterprises more competitive now and in the future. We have to adapt to the fast revolving
business environment. Many business owners fail because they dont want to actually try
innovating their business, management and marketing strategies. For example, many businesses
dont survive the competition because they dont give attention to online or Internet marketing.
They dont want to experiment on putting their business online through websites and social media.

4. They dont stick to their business plan. We start a business because we have a plan, even
though this plan is only written in our minds. For small business owners, they can still succeed in
business even without a formal or detailed plan, as long as their plans are written in their hearts
like a mission in life. However, some business owners only put their plans in documents and
sometimes only their minds. This makes them easily forget their plans and abandon them when
distractions come.

5. They overreact to problems. Business owners fail because they are more reactive than
proactive. When problems and troubles come, they tend to blame other people or things instead of
taking the responsibility to find immediate and permanent solutions. Unlike successful business
owners and entrepreneurs who find problems as challenges, opportunities or blessings in disguise,
these business people find problems as unfair events or bad lucks.

6. They dont lead their workers. There are number of Filipino businessmen who fail in business
because they cannot manage their people or employees well. They dont learn the heart of
management leadership. Instead, they become too bossy causing their workers to lose motivation
and their business organization to lose productivity.

7. They satisfy themselves first before their customers. To be in business is to be in service. To
be in service, whether providing goods or skills, is to satisfy customers. Those who prioritize their
own satisfaction (own profit) before the satisfaction of their customers usually fail to earn loyal and
long-term customers and this causes their business to only live for a short time. To achieve
business success, you have to always enter into a win-win situation, that is, both your customers
and you should actually be happy.

8. They dont follow the rules. Laws and rules are everywhere. They are created to promote
regulation and order. That is why whether you like it or not, you have to abide them. But still there
are many Filipino business owners who dont follow rules, like in business registration and
taxation. Consequently, their businesses or companies are always subject to investigation,
penalties, and sometimes closure.

9. They dont know how to manage their personal finance. Business finance and personal
finance should not be in a conflict with each other. There are Filipino business owners and
entrepreneurs who mess up their business money by spending it on their personal needs, like using
it to buy a car or expensive gadgets that are only for their personal use and arent useful to their
business. The result? Their business becomes bankrupt.

10. They lack support from the government
Im not being too pessimistic with the government. Lets face the truth and look for the rooms for
improvement. The reality is the support needed by micro, small, and medium enterprises
(MSMEs) from the government is still not enough to significantly boost their businesses. The
bureaucratic red-tape is still imminent in the Philippine government agencies and many aspiring
talented entrepreneurs are still far from getting financial aid that are guaranteed by the
government.

This article aims to make more successful Filipino business owners and entrepreneurs, as well to
make our nation more developed. Therefore, may this post be a source of self-reflection and self-
learning towards success and progress for all of us.