Tag Archives: philippine loan sharks

14 Ways to Get Fund for your Business

how do i get funding for business

Do you have any plan to open a new business?  Or maybe you would like to raise additional fund for your existing business?  Are you having second thoughts where to get the fund that you need?

Whether your need is for an expansion or just trying to save the day, here are some options you can look into in its proper order of priority:

Your own savings

Save from your own money and use it to fund your business.  When you are looking into starting your own business, it is highly advisable that you start with saving enough money to fund your business. There is nothing wrong if you delay your plan for a couple of months to give you space and do your business plan properly.  It is much easier to manage a business without credit exposure in mind.  You can concentrate on your product or business promotion and marketing or simply focus in the operation rather than looking into the bank account and pressure yourself about any loan repayment.

Immediate Family Member

If your savings is not enough, then you can go to your family member to get additional of what you need.   At least they are not to expect you to pay for interest.  Nevertheless, they will be happy if you repay the principal back soon.

Close Relatives

A close relative is someone who treats you as member of immediate family.  You can discuss with them your plans and let them know that you may need their help this time.  At least you need to discuss how you are planning to repay them.

Distant Relatives

Here, timing is necessary.  Observe first and find out who among them might be capable to assist you.  If you get something from them, make sure you repay them.

Local Cooperative

If you have plans to go into business in the near future, then you should start applying for membership with any local cooperative nearby.  Cooperatives usually provide financial assistance for members who would like to borrow money for a project or for any other reason.  Besides, what you invest here (i.e. membership, monthly dues) is worth it.  As you become a member, any profits the cooperative have gained are divided among its members through dividend.  It serves a two-way purpose: you help the community through the cooperative and the cooperative helps you as a part of its community.

Friends

You will have to treat this the same way as you would borrow from your distant relative.  Sometimes it will take some quality time before you can convince them.  The others would expect some sort of interest in return.  If you have another means to bargain or trade-off, the easier it will be to convince them.  Just don’t include blackmailing any of them! 🙂

Employer

Inquire if your company has any existing financial assistance program extended to employees. Make a company loan according to what the company can offer and if this is not enough, find an additional money somewhere else.

Offer for Partnership or Joint Venture (JV)

Look for a potential business partner or a JV partner to reduce your fund exposure.  Depending on your partnership arrangement, your partner may provide a certain percentage of the fund required for the business.  Just make sure that you own the major part of the business.  Note that if you have a JV Partner, part of the business profit will be sub-divided according to the percentage of ownership of both partners.

Incorporate

This is almost the same as Partnership but only with more partners involved.  Usually, it takes 5 people to start a corporation.  Each of them will have to provide their own share of capital.  On certain cases, Industrial Partners becomes a part owner of the corporation without injecting capital due to his skills to run the business or his ability to create a large market or both.

Angel Investors

These are investors who may have been endorsed by someone and is willing to inject fund without getting himself involve in the actual business operation.  The interest of an Angel Investor is purely focused on the Return of Investment (ROI) which is expected out of the operation of business in a certain period of time.

Existing Government Financial Aid Programs

Look for any existing financial programs being provided by the government for some forms of businesses that contributes to the growth of the economy.  An example is if you intend to venture in an export or import business.  In this type of business, there are existing facilities ready to assist as provided by an agreement between the private sector and the government.  Investigate further and look for an alternative like what has been mentioned.

Rural Banks

Rural Banks provides a reasonable interest rates and processing fee which is considered lower than commercial banks but resources are limited.  There are documentations to comply with in order to process a loan application.  Approval or denial of loan is subject to further examination by the Board of Directors.

Commercial Banks

Commercial Bank has a very wide resources and considerably higher interest rate and processing fee than rural banks.  As commercial banks are corporate-focused, they will require a lot of documents from their borrower.  If you are ready to patiently look for, ready, and prepare the documentary requirements, then you can give it a try.   But at least don’t expect that things will be easy.

Loan Sharks

Not recommended! They normally charge very high interest rate which you may not afford to   completely repay.  For more information about this, check my article on Loan Sharks.

Now here is my 1 peso personal tip:  Plan your business well.  Know its ins and outs.  Spend time and put yourself in a brainstorming activity to ensure the success of your business.  When you are confident that your plan is fool-proof and expects the 100% success of your business, spend another time to conduct a reverse brainstorming.  By reverse brainstorming, you should study how competition can destroy your fool-proof plan.  You also have to consider the pitfall that may come from the inner side of your business.  Consider your financial capacity, unexpected incidents, manpower behavior which all can influence the advancement of your business.  Identify the factors that can hurt your business or can take your business down and make plan on how to avoid it. Practice it regularly and always look into your business’ behavior on a step-by-step manner.  More importantly, repay your creditors so you can ask them for assistance some other time. Enjoy your business and have fun!

Also recommends 15th Way To Get Business Funding

The Loan Shark’s Lending Facility in Philippines

pinoy loan sharks offering a bite

In my other article, I have provided a brief about Loan Sharks particularly operating in the Philippines.  I have not forgotten that I promised to bring you an idea how Loan Sharks are delivering their facility.

Unless you have made business with any of them before, you may still be wondering how things work in their business. In the said article I have also mentioned that it takes to be connected to people so you can be introduced to a Loan Shark.

I am providing you below the available means that a Loan Shark can be interested so your requirement for additional fund can be granted.   What is listed therefore provides idea of possible vehicle that you can consider to offer when you deal with a Loan Shark – and this however depends to their business interest and acceptance.

The facilities loan sharks may consider are:

  1. Check Discounting
  2. Collateral Loan that includes Estate, Vehicles, and any other valuable considerations
  3. Assignment of business receivables; i.e. account receivables from your customers
  4. Partial business ownership; i.e. offering him to own a certain percentage on any of your existing business

With the facilities mentioned above, the Loan Shark provides different bracket of interest rates.  This is due to fact that they have different priorities of acceptable guarantee on loans.   Since interest rate provided by Loan Shark is considerably high compared than commercial lenders, it would be wise for the borrower to consider this option last in the number of available alternative sources of fund.  I shall be providing you a number of alternatives you can consider ahead rather than going straight to a loan shark in another article I am writing soon.

Generally speaking, Loan Sharks operates because of the clear and present opportunity that another person is in-need fund and without the Loan Shark’s cold cash capital, there will be no business for them of this kind after all.  What beauty their business has is that their transactions do not pass along taxation.  This means they are not taxed for every interest income they gain from their borrowers.  It is because their transaction is considered under the shadow of the night since most of these loan sharks does not register for a business name for the said business nor declare their income for lending money.

On the other hand, a Loan Shark’s business is a high risk business compared than any other lending related business.  Since they are highly exposed to non-payment by borrowers up to going to the tedious process of filing legal complaints, they need to be very cautious in entertaining borrowers.  Background checking is always part of the process and having yourself endorsed by someone they knew already gives you an extra edge for approval consideration.

In another vantage view, some Loan Sharks are not actually the owner of the fund they are using.  They are just managing another person’s money and the money is from a person who may not want to appear publicly in this business.  Most of these financiers who use a representative are actually engaged in other forms of businesses: May the source of money comes in legally or otherwise.  In reality, Loan Sharks are just around the corner, in legit businesses, in big corporations, in the slums, and even in the government.

When There is a Need for Fund, There is Always the Loan Sharks

pinoy loan shark

Need a Loan Shark from somewhere in the Philippines?  Many people who are in business or simply needs an additional fund that they can use to bridge finances consider this facility to fill their financial gap.

WARNING:  LOAN SHARKS CAN CRIPPLE YOUR FINANCES.

Loan Sharks can be represented by an individual or an institution.  For those who are interested or considering this sort of facility and have not met or made business to anyone of these Loan Sharks, you should ask your friends or business contacts if they knew anyone as Loan Sharks mostly entertain borrowers only by means of referral.  Otherwise, you must be in a very stable and highly profitable business before they can consider lending their capital to you.

In the Philippines, Loan Sharks offers an interest rate ranging between 5% – 9% per month of the total amount you have borrowed.

While borrowing from Loan Shark may seems to be a lot faster than going to commercial banks, you should be able to convince them that you are able to repay the money you are borrowing.  Providing them some proof of business existence and documentation is mostly required.  Most of the case that if you are a first time borrower that they will ask for copies of your financial documents such as Audited Financial Statements and Bank Account information and Statement of Account.

If they see that you can be a credible borrower, they will facilitate the release of your requested loan in exchange of signing a loan agreement with them backed by post-dated checks equivalent to the full amount of your loan.  There are a couple of means a Loan Shark operates and I will discuss it in my Loan Shark Lending Facility article.

Loan Sharks in the Philippines normally takes advance interest from the proceeds so you should be able to expect this deduction from the amount that you really need where you intend to use this fund.