SBCorp encourages MSMEs to go online

SBCorp, the micro lending arm of the Department of Trade and Industry (DTI), has urged micro, small and medium enterprises (MSMEs) to go online.

During a virtual webinar entitled: “The New Normal is Digital: Business Solutions for MSMEs,” attended by MSMEs across different industries to mark the culmination of SBCorp’s 30th anniversary and the National MSME Week celebration, SBCorp emphasized the need to go digital.

SBCorp intentionally centered its anniversary celebration on digitalization to empower MSMEs with practical tools and valuable knowledge that will equip them not only in adapting to the new normal, but also in the ever-changing times of the digital era.

SBCorp itself fully digitalized its loan processes shortly after the lockdown last year. As the financing arm of the Department of Trade and Industry (DTI), SBCorp saw the need to digitalize its financial services to be able to serve its clients better, empower MSMEs, and address the gaps in access to finance.

Evelyn Felias, SBCorp’s Head of Information Technology Group, said that SBCorp had planned the digitalization of its financial services as early as 2019 and was able to implement it when the lockdown started. The digital process starts from the registration of the potential borrower, submission of documentary requirements and approval, up to the releasing of the loan.

Dr. Vivian Sarabia of the renowned Sarabia Optical Clinics gave her testimonial of how the digital transformation of SBCorp helped her restart her business. She said the online application made it convenient for borrowers to access funds from SBCorp.

“I’ve never taken out loans before. However, eventually, I was left with no choice when funds started to deplete. Thanks to SBCorp, I did not have to make the difficult decision of completely closing down my business,” she said.

To date, SBCorp has approved 32,823 loan applications from its CARES (COVID-19 Assistance to Restart Enterprises) program with a fully digitalized loan application system. These correspond to a total loan amount of ₱5.1 billion out of the ₱8.08 billion available for MSMEs, tourism businesses, cooperatives, hospitals, and repatriated or displaced Overseas Filipino Workers (OFWs) affected by COVID-19 pandemic.

In the same forum, Trade Secretary Ramon Lopez noted that around 73 percent of small businesses in the Philippines as of September last year are in need of capacity-building initiatives or support in digitalizing their businesses.

DTI conducted a study and noted that the Philippines is lagging behind its ASEAN neighbors in adapting digital transformation for their businesses. It noted that the Philippines is in “level zero” or a “level below basic” in the ASEAN categories of digitalization of businesses. ASEAN small businesses are under Basic category when they use email and mobile devices in their businesses. Intermediate category is when they start selling online, while Advanced category uses data analytics in their businesses.

Assistant Secretary Jean Pacheco, who heads DTI’s e-Commerce Program Office, noted that given the statistics, DTI is working to innovate and implement programs under the E-Commerce Roadmap 2022 that can give MSMEs the capacity to rebuild by providing them with domestic and international market access, digitalization, and logistics integration.

“We found that 23 percent of [our] respondents have mobile phones but they don’t use it for business, only for personal use. That’s what we’re trying to do at DTI – we need to identify what level they are in, or what category they belong to so that the appropriate intervention can be given to that particular MSME in its digital transformation journey,” the Assistant Secretary said.

Even through their phones, MSMEs can put their businesses online by using social media channels such as Facebook and Instagram or create websites to promote and sell their products, and process their transactions through hassle-free online payment channels such as online banking and fintech apps like GCash and PayMaya.

Victor Tria, First Vice President of PLDT Enterprise, said that based on studies, businesses who have adapted to digitalization found themselves in a better position of coping with the health crisis.

“The crisis gave a big push to

MSMEs on digitalization and those who were already operating online or were able adapt to IT solutions are more likely to sustain their operations,” Tria said.

In the case of the badly-hit tourism sector, Tourism Undersecretary Robert Alabado III said that aside from the industry shutdown due to the pandemic, there was also the challenge of adapting fast with the evolving preferences of travelers – which the industry is slowly addressing with rapid digitalization of tourism-related businesses.

Alabado said that in today’s “low-touch economy,” the tourism industry had to transform and convert skills, infrastructures, and resources to pivot to digital to be able to cater to travelers.

Examples of this include adapting skills to new uses such as tour operators becoming online marketing specialists, hotels becoming quarantine or workcation facilities, conversion of tour vans to BPO service vans, holding contactless “hybrid meetings”, and forming partnerships such as sharing of employees.

Alabado said that the Department of Tourism (DOT) in partnership with the DTI and SBCorp empower MSMEs in the tourism sector by helping them become visible online, maximize social media to reach target audience, and to use all available mobile applications to ensure compliance with health and safety protocols.

Aileen Clemente, Chairman and President of Rajah Travel Corporation, pointed out that businesses do not only need to digitalize its frontend services but even the back-end operations. She said that while some government agencies already digitalized transactions, there are still other entities and services that have yet to adapt.

Pacheco said that digitalization in businesses is seen to accelerate, especially the adoption of e-commerce, citing the 2021 Digital Report showing that 80 percent of internet users bought something online.

“Our goal for 2022 is to reach one million e-commerce enterprises... while for 2021, our target is 750,000. Our E-Commerce Roadmap is simple. We want to have more sellers and buyers who are buying frequently to improve our gross merchandise value,” she said.

“We can also see some great strides, in terms of speed of the internet. Because of that, we really are confident that with the accelerated adoption of e-commerce during the pandemic that this sector will grow,” she added.

Meanwhile, Santiago Lim, SBCorp Executive Vice President and COO, presented the agency’s latest loan facility called STAPLES or Sustaining Trade and Access to Primary Food and Link Enterprises (STAPLES) which is aimed to finance MSMEs in the food supply chain.

Through the interest-free and collateral-free program, MSMEs participating in the supply, production, distribution, and retailing chain of SBCorp-accredited fast moving consumer goods (FMCG) food companies can replenish their working capital or fund other business needs.