Microenterprise Access to Banking Services

ALBERT and NONITA DE LA PEÑA: Access to Capital Sparks Growth

Albert de la Peña and his wife Nonita are partners in more than just marriage.  One year ago Albert and Nonita applied for, and received, a PhP17,000 ($340) loan to expand business at their electrical store.  Many loans later, the de la Peñas have moved their store into a larger building, increased the stock available to their customers, and quadrupled their daily sales.  The de la Peñas soon hope to move their store to an even larger location.

In the electrical supply business since 1996, the de la Peñas had never before received a loan from a bank.  However in November 2000, the couple was offered the chance to participate in a new microfinance program at their local bank, the Rural Bank of Cantilan.  The program, known as KITA, offers small loans to microentrepreneurs to help them build their businesses.

Most microentrepreneurs in the Philippines have difficulty acquiring capital and must rely on five-sixers, informal lenders who charge up to 20% per month for loans.

“Before KITA we had only heard of loans offered by five-sixers.  Interest was too high and we couldn’t afford that option,” says Mrs. de la Peña, who runs the store while Albert teaches at a nearby school.  “The KITA loan allowed us to purchase equipment up front so that we could expand our sales while repaying the loan at reasonable interest rates.”

After just six months of diligent repayment on their first loan, the de la Peñas were able to increase the amount they initially borrowed three-fold.  The Rural Bank of Cantilan considers the de la Peñas to be top clients who never miss a payment.  Such behavior is encouraged under the KITA program, which strictly enforces a zero tolerance policy on delinquent loans.

The Rural Bank of Cantilan also requires that all borrowers of KITA loans open and maintain a savings account.  Since their initial loan one year ago, Mr. and Mrs. de la Peña have saved almost PhP15,000.  With four young children, they hope to continue saving in preparation for their family’s and children’s future.

“As parents, you can’t stop thinking about your family’s well-being,” explains Mrs. de la Peña.  “We provide for our family through our business.  KITA has helped us focus on what is important to us; it has helped us expand our electrical shop and take care of our family.  For that we are grateful.”

The KITA loan program was developed by the Rural Bank of Cantilan through its participation in the Microenterprise Access to Banking Services (MABS) program.