THE Philippines posted 5.6 percent GDP growth in the second quarter— a substantial figure though still below last year’s 6.5 percent for the same period.
Much of this economic output comes from micro, small, and medium enterprises (MSMEs), often called the backbone of our economy.
MSMEs drive economic growth by increasing the mobility of funds, products, and services while accelerating money velocity. Their impact ripples through communities, meeting people’s consumption needs. Yet despite their proven effectiveness, many entrepreneurs struggle not just with managing existing businesses but with starting new ones. Some turn to credit—borrowing other people’s money to launch business ventures. And there’s nothing wrong with that.
Learning from global practices
In the United States, starting a business with other people’s money is common practice. Entrepreneurs tap various sources: family and friends, banks and credit unions, lenders and crowdfunding platforms. Cash flow becomes critical as they must maintain operations while simultaneously repaying loans, especially during their first months or years.
In the Philippines, a consumer expectations survey found that about 27 percent of Filipinos applied for loans to start or expand businesses—seemingly low compared to other countries’ household debt ratios, likely because most first loans target household consumption rather than business capital.
Expert insights on Filipino entrepreneurs
During Asialink Group’s “Financing For All” virtual forum through GoodDeal, two experts confirmed these survey findings about Filipino entrepreneurs and prospective business owners.
Khamile Sabas of Global SME Loans shared that many overseas Filipino workers (OFWs) envision retiring from employment with businesses as their next steady income source. She noted their confidence in handling loans for business capital, as they typically save systematically for repayments. “When you know the time is right to start a business and just need additional cash to get started, a low-interest loan is a great option,” Sabas explained.
Tish Payawal from AFC SME discussed how real estate financing and asset-backed mortgage loans help entrepreneurs launch second income streams and expand existing businesses. “Many acquire properties through financing and pay in installments to start businesses with assets that will fully become theirs through monthly amortizations as manageable as rent,” Payawal noted.
The bottom line
If you have sufficient savings to start your dream business, staying within your limits remains ideal—just as in any business operation. However, you shouldn’t let opportunities pass simply due to lack of credit access at the right time. This is where loans prove valuable.
With the right financial formula and prudent business management, achieving returns higher than your cost of funds isn’t just possible—it can become your entrepreneurial advantage.
