Fintech: Opportunity knocks for common folk, micro businesses

The American humorist Milton Berle famously said that: “When opportunity doesn’t knock, build a door.”

Those born to affluence of course have had opportunity knocking from the beginning, studying at private schools, making important connections from the very start, having gainful employment later on setting up businesses, being extended credit lines and obtaining capital from financial institutions who recognize pedigree and healthy bank accounts. Opportunity knocked and they opened the door.

The rest are not as lucky. And so given inherent creativity and entrepreneurial skills they do set out to build that “door” — beginning with a small food stall perhaps, or hawking and vending. But as any entrepreneur would know, all beginnings are a struggle, and all concerns counting the most promising runs into problems, like needed supplies and upgraded equipment. A loan could not come at a better time for small folk who are hitting their stride, let alone those who are still struggling and yet boldly pursuing knowing in their hearts that they are on to something good. 

But such is the fate of what traditional institutions deem “unbankable” — folk in the lower strata, for whom traditional banking does not make “business sense.”

That’s the inconvenient truth and the reason traditional institutions are hesitant to approve even small loans to micro concerns. 

Thus, common folk turn to informal lenders —even loan sharks who are always ready to give out loans and almost on a whim. While loan sharks provide the cash, loans from private entities like these most often become a problem as borrowers who are already low in cash scramble to pay the loans with exorbitant rates going as high as 20% a month.


Opportunity knocks! Rise of new online lenders

Recognizing the limits presented by traditional lending practices, fintech companies gave birth to a new breed of online lenders: ones that only need a registered profile to approve loans. They also understand the need for loans is always urgent, as such they  have also significantly reduced the processing time, approving loans within several days or sometimes within hours. 

This is precisely what online loan platform Cashalo is doing in the Philippines. Interested borrowers can secure a loan on the app by following a five-step process, only requiring a registered profile, a valid ID, and proof of billing. As Cashalo loans can be requested and granted rather quickly, anyone can obtain money whenever they need it.


Helping transform borrowers to business owners

Among Cashalo’s financial inclusion vision is to provide assistance to ordinary Pinoys who are looking to set up a small business or sustain one. While Cashalo doesn’t provide large loans such as those from traditional banks, Cashalo makes it accessible for Filipinos to secure loans to shoulder different needs, from as simple as buying supplies for a sari-sari store to providing an amount to help cover the downpayment of a motorcycle. 

One does not have to look further than an average Filipino household to see how loans can have a positive impact. For instance, a stay-at-home mother wants to help her partner earn money by starting a small business. She can secure a loan from Cashalo to cover a portion of a small home-based food business.

As she attracts more and more customers and her profits increase, her business becomes sustainable enough for her to pay off her loans. Her business may even grow for her to hire a helper or a delivery guy.

The stay-at-home mother then evolves from just a borrower looking for an additional income stream for her financially struggling family to a small business owner providing a job opportunity for those out of work or looking for one.

While entrepreneurial journeys for even small businesses like this one are not clear-cut, it is still without a doubt that through Cashalo, Filipinos who lack access to financial services, now have a real chance to put to good use their creativity and entrepreneurial skills that they would otherwise not have the opportunity to showcase.