In the Philippines’ sachet economy, there are 1.3 million sari-sari stores patronized by 94% of the population. Despite these numbers, many of these sari-sari stores struggle and find it hard to grow their business because of lack of capital. To address this problem, UNO Digital Bank has partnered with 1Sari Financing Corporation to help sari-sari store owners expand and have a more sustainable business.
UNO Digital Bank is one of the six digital banks licensed by the Bangko Sentral ng Pilipinas (BSP), while 1Sari Financing Corporation provides support to MSME business owners primarily sari-sari store owners, and owners of other retail stores such as groceries and supermarkets.
“SMEs are a major driver of the Philippine economy. This partnership with 1Sari will help us drive credit inclusion for this very important segment. This is a good starting point for UNO Digital Bank in making Lending simpler and more accessible. We would like to offer loans both to the salaried class and self-employed through a combination of general-purpose loans, inventory, financing loans and working capital loans. This partnership with 1Sari Financing Corporation is just the start of our focus towards inventory financing,” Manish Bhai, UNO Digital Bank CEO and Founder.
“This partnership will give us a boost in providing loans to interested applicants. We are hopeful that with this, more and more sari-sari store owners will be able to expand and grow their business,” John Madarang, Co-founder, and President of 1Sari Financing Corporation said.
The potential for the sari-sari stores’ growth is also supported by data stating that they transact 70% of all manufactured goods in the country. Sari-sari stores are primarily cash-based businesses. They manage their cash flow on a day-by-day basis, which can limit their potential earnings. Therefore, loan access is crucial for these business owners.
Bangko Sentral ng Pilipinas’ (BSP) 2021 Financial Inclusion Study states that 57% of Filipinos still obtain loans through informal credit, mainly from relatives and informal loan providers. Rigid documentary requirements and the difficulty of the application process are two major reasons why borrowers choose not to apply for a loan from formal financial institutions, says the study.
UNO Digital Bank, a full-spectrum credit-led digital bank, aims to reduce informal lending practice by increasing loan access to more Filipinos. “Today, only 11% of Filipinos borrow from the formal sector (Financial Institutions and Banks). We want to take that number up. We believe credit inclusion is a very important part of financial empowerment,” Manish Bhai said.
UNO Digital Bank wants to promote responsible lending. Aside from this partnership with 1Sari, UNO is also working with Proxtera in their SME Financial Education Program. UNO is sponsoring the certification courses of 10,000 SMEs and those who successfully complete the program can avail themselves of accelerated onboarding and other exclusive offers from UNO.
Through the use of proprietary algorithms, UNO can also make loan offers directly to those who currently only borrow from the informal sector. This is a prime example of using technology for good.