Financing firm South Asialink Finance Corp. (SAFC) is set to pick up its expansion pace over the next two years.
Joel Cruz, SAFC president, in an interview sees 2024 as a big year for the company as it expects the entry before the end of this year of a private equity investor to fund its expansion.
Cruz said this will enable SAFC to cater to the needs of micro, small and medium enterprises (MSMEs) that have long been unserved or underserved by banks.
Cruz said the company could also tap an initial public offering (IPO) of its shares to raise funds.
SAFC plans to grow its network by opening more branches in Luzon where the bulk of business is derived from.
Founded in 2003 by a group of businessmen with only P10 million as initial funding and one branch in South Luzon, SAFC has since grown into a network of 38 and an asset base of P4.5 billion as of end 2022.
Cruz said SAFC plans to open 10 branches this year and 25 in 2024.
Specializing in sangla (pawning) of ORCR or car/truck refinancing, SAFC enables borrowers to leverage their vehicles as collateral for loans. Entrepreneurs can then fulfill their orders, pay suppliers, manage bills, and compensate their employees. This product accounts for 70 percent of SAFC’s business.
Cruz said SAFC has also helped families dreaming of owning their first car get access to funds that allow them to acquire a used vehicle.
Cruz said SAFC has also extended its financial services to seafarers and overseas Filipino workers (OFWs), catering to approximately 2,500 customers. The OFW and Seaman’s Loan has since been turned over to a new corporate subsidiary, Wisefund Finance Corp.
Cruz believes SAFC the past 20 years has helped fill the gap in the financing needs of MSMEs.
As a former banker, Cruz saw for himself the difficulty faced by MSMEs in accessing funds because of the stringent requirements of banks.
“Without access to credit, they find it hard to grow their business,” Cruz said.
At SAFC, one only has to show a bank statement or proof of income. Interest rates are at 1.1 to 1.5 percent per month.
Financing options can span from 12 months to a maximum of 48 months, at times extended repayment terms of up to five years, adjusted to loan amounts. For the sangla ORCR, the quantum of the loan is linked to the assessed value of the collateral vehicle.
Cruz also acknowledges the stigma attached to the term “sangla” and said SAF goes far beyond a mere financial transaction but a lifeline when businesses need it most.
In other words, SAFC redefines “sangla” as a legitimate, dignified means of raising funds.
Like any other company, SAFC was also hit by the pandemic when banks closed their credit taps. The company had to let go of 199 employees.
Despite this, 2021 was a record year for the company when it released P3.6 billion loans, surpassing pre-pandemic level of P3.3 billion in 2019.
Today, SAFC has recovered the lost workforce and has grown its employee count to 451. By 2024, SAFC plans to add 150 workers.
SAFC is serving up 700 to 800 customers each month mostly trading companies and construction firms with government contracts, about 85 percent of which are first-time borrowers. About 10 percent of its clients do not possess bank accounts and 10 percent were previously turned down by traditional banks.
Average releases per month is P350 million to P400 million at P450,000 to P475,000 per loan.
SAFC has a loan exposure of about P4 billion, and a non-performing loan rate of less than a percent.
Cruz said SAFC meticulously conveys all terms and conditions to its clients and offers tailor-made solutions.
“We approach each customer as an individual with unique circumstances, “ he said.
With credit facilities of P3.2 billion and P1.2 billion funds available, SAFC is optimistic injection of new funds will enable it to broaden its reach.
For this year, SAFC needs P1.9 billion funds, of which P1 billion has been obtained. The remaining P900 million to be secured towards the end of the year will sustain the operations until the first quarter of 2024 just in time for the entry of the private equity investor.
Cruz said the investor would take up to 20 percent ownership of the company. “If this is successful, the IPO can wait,” Cruz said.
“While traditional banks have their place, we at SAFC recognize the unique needs and aspirations of our target audience. We’re not competing with banks; we’re complementing the financial landscape. Our clients often come to us seeking faster, more flexible solutions without the intricacies and lengthy processes often associated with banks,” Cruz said. Irma Isip
