Small entrepreneurs urged to shun loan sharks

FILIPINO small entrepreneurs should not be afraid to borrow from banks for their business capital needs because they offer more reasonable interest rates and safer payment terms compared with unregulated lenders, according to UnionDigital Bank’s chief executive officer.

- By Edg Adrian A. Eva Reporter

Many micro, small and medium enterprises (MSME) continue to rely on informal lenders, known locally as “five-six,” because of misconceptions that bank loans are difficult to access, said Danila “Bong” J. Mojica, president and CEO at the country’s first digital lender.

“Where do they go? To five-six lenders who are unregulated,” he told BusinessWorld in Filipino on the sidelines of the launch of its financial products on Saturday. “The interest rates are no joke — 20% a month. I even know one that charges 180% per annum. But many entrepreneurs still borrow because they have no choice.”