FOR many Filipino business owners, finding customers is not always the biggest challenge. Sometimes, it is having enough money to serve them.
A construction company may have projects lined up, but lacks funds for materials. A distributor may receive a large purchase order, but needs capital to replenish inventory. A logistics provider may have regular clients, but struggles with rising fuel costs and delayed payments.
These businesses have opportunities to grow, yet lack the cash to pursue them.
Inflation rose to 7.2 percent in September from 6.1 percent in August, adding pressure on operating expenses. The Bangko Sentral ng Pilipinas (BSP) raised its policy rate to 5 percent in October, making borrowing costs another concern.
For small and medium enterprises (SMEs), higher prices mean spending more on supplies, transportation, utilities, and other daily needs. Higher interest rates can also make additional capital more expensive.
With Christmas approaching, these pressures become more urgent.
The last two months of the year are crucial for many Philippine businesses. Retailers prepare for holiday shoppers, food suppliers anticipate more orders, distributors build inventory, and logistics companies brace for additional deliveries.
But these opportunities require money upfront. Businesses must buy inventory and pay employees and suppliers, even when customers take 30, 60 or 90 days to settle their accounts.
Stronger sales do not always mean better cash flow.
Through conversations with entrepreneurs, I have learned that businesses do not seek financing only when they are struggling. Some need capital because orders are increasing and they do not want to turn customers away.
Borrowing at high interest rates requires careful judgment. Business owners must calculate financing costs and determine whether expected earnings and collections can cover repayments.
Passing up an order also has a cost. A company that cannot afford materials may lose revenue and a valuable customer. The decision requires weighing the cost of financing against the likely return — and the risk of payments arriving late.
Not the whole story
For lenders, understanding these circumstances matters. Financial performance, repayment capacity, and warning signs must guide credit decisions. But financial statements do not always tell the whole story.
A company may report lower revenue after restructuring while retaining active contracts. Another may have completed projects and substantial receivables, but little cash because customers have yet to pay. Weak past results may also obscure signs of recovery.
These situations deserve closer examination. Contracts, bank transactions, payment records and current business activity can help lenders assess whether a cash shortage is temporary or reflects deeper problems.
However, this does not mean every application should be approved. Additional debt cannot solve every business problem. But credible orders, reliable customers, and a demonstrated ability to repay should carry weight.
Responsible lending requires understanding and managing risk.
Business owners must prepare as well. Before the holiday rush, they should map expenses against expected collections, confirm customer payment schedules, and compare financing offers.
A realistic sales forecast, manageable repayment terms, and a reserve for unexpected costs can help them determine how much working capital they need. These steps can also reveal whether accepting an order will strengthen the business or stretch it too far.
Financial institutions have an equally important role. Caution during uncertain times is understandable, but sound assessment should also recognize viable businesses with room to grow.
Behind every purchase order, contract and financial statement are decisions that affect employees, customers and families.
Not every business needs a loan, and not every applicant will qualify. But those with credible opportunities and the capacity to repay deserve a fair assessment.
Sometimes, what stands between a business and its next opportunity is simply the capital to move forward.
Yvee Kristine Biscarra is an account manager at First Circle, where she works with Philippine SMEs to help them access financing solutions and navigate their working capital needs.
