Lending Money In The Philippines

[Dave Hounddriver]

never a lender or a borrower be.

Polonius:

Neither a borrower nor a lender be,

For loan oft loses both itself and friend,

And borrowing dulls the edge of husbandry.

Hamlet Act 1, scene 3, 75–77

Shakespeare

[i am bob]

My Gawd! Dave's a Thespian!!!

And I bet Polonius - or even Bard Bill - didn't ever have Filipino relatives!

:mocking:

[Thomas]

I hope members who want to consider borrowing or loaning money will become sensitized to the attitudes he describes.

Well. Surely not loan from a loan shark,

but there are loans with interests around 10-20 percent e g for financing house, and some business give much higher profit than that, so if I'm pretty sure it's a good business, then I see no - big enough* :) - reason to not borrow to do that business, if not having enough money to do it anyway.

*But I'm a gambler, but taking only CALCULATED risks, when I find the odds being good enough.

The only debt which s still owed to us is one of a relative who runs a long- standing sari sari.

Not odd if sarisari owners have problem paying back. Many shops in "kano countries" have gone bankruptcy since 2008, and there are much to many sarisaris in the Philippines, which make it extra hard.

(Among my girlfriends goals are starting one a bit biger sarisari, but I'm trying to convince her that's not a good idea, because of the hard competition. She is clever, and has started thinking rather much of other alternatives, so I believe I can convince her it's better to start something else :)

Sorry for long story.

Just wanted to point out that financial dealings he can be a complex and never- ending hassle. There are many other ways of making investments and reaping the rewards.

Why sorry for long story??? Long stories have space to tell more :)

Yes, sure there are many other alternatives. I have listed all business ideas I can see me be involved in at the Philippines. Over 170 so far - but some of them are probably bad :hystery: (Only Harvest sharing involves lending money/invest where I do no work myself. I will sure NOT have a 5-6 loan business, so that's NOT in my list.)

(Other is totaly off topic, so I ask that in a PM.)

[MikeeW]

Just for those interested, a bakery is an "investment" in the general sense. That is, there needs to be an initial investment for the equipment, a facility and supplies. It becomes a bit confusing to offer any specifics as to what this would cost. Each member of this forum will have a completely different set of curcumstances. In my case, I had property which only needed to be modified a bit to accommodate the oven and such. For someone with no property, then it becomes a question as to where to have the bakery with associated lease, purchase or what you require.

As to equipment, it all depends upon what sort of bread items you will sell. There are some pretty typical items ( just look at any local bakery and you'll see what I mean). Work tables, racks for bread to rise on, storage for flour, lard, etc. There is typically some sort of mixer, and they can vary depending upon where you have access to professional equipment. In my area, these are made locally.

Ovens can be of a couple of types in my area. A wood fired one is popular as it requires inexpensive wood. These are permanent ( cant be moved). Gas ovens are what we use. Again, these are made locally. Pretty basic design.

If sliced bread is made, then a slicer is a nice to have item. We didn't for a while, but glad we have one now. Smaller items include fans, heat sealers etc.

Add to that the various sundry items like aprons, hair nets and the like. Our bakers use aprons we make from empty flour sacks (which we sell along with various empty containers).

The cost of flour, sugar, lard, flavorings and the like an vary quite a bit. Every year at this time, the price of flour and sugar increases.....three guesses why.

We pay wages to workers who make the bread. The delivery guys basically are independent from us, and we sell them bread at a fixed discount. The more they sell, the more they make. A couple of our bakers deliver before starting their work shift. The delivery guys are where the real sales are. We give them bonuses of various types when we can.

Be aware, a lot of small bakeries are true Ma and Pa places, where the family works. The bakers sometimes in these smaller places get paid according to how many sacks of flour are used. More bread made, more salary. Wages for bakers can really suck in some of these places. We have guys lining up to work at our place as we pay a regular wage and never fail to pay it. As well, we give bonuses.

I really couldn't offer a minimum investment cost as we have done this over time. The most expensive piece of equipment was an oven ( we have two) around 40,000 pesos each.

The experience of starting this has been great, but with lots of headaches. There are various business license issues. We've had to fire a couple of workers. None of these had stopped us. We are pleased we can keep a fair number of people employed. We have reinvested much of out gain into more equipment and such.

If you are starting a bakery in a city, I would imagine the competition is much greater and the workers can make demands according to their own community standards. We are not in a city. In fact, where we live, there had been a bakery for many years. They kept getting smaller and smaller until one day someone came and took away all the equipment. That is when we opened ours, as we had not wanted to compete. Bakeries pop like mushrooms in this area. In the past few weeks a bakery opened in a place not too far from us. Kinda funny to see their Facebook page of their offerings. They had set up some of their workspace right in their living room.

One thing that inspired us was a relative who had worked at a bakery for many years. He had not developed skills to make the bread, but was so enthusiastic about the idea we decided to move forward with the plan.

As to investment advice, I do not recommend this to anyone who sees it as exclusively an investment. It's not like investing n a franchise like Jollibee or Pizza Hut. Too many decisions to be made. I even did a lot of the wiring and such in the place.

[Thomas]

As to investment advice, I do not recommend this to anyone who sees it as exclusively an investment.

How about if see it as a COMBINATION of giving work to relatives and get an interesting profit* at the investment (and an OK own salary if work self there too)?

*With "interesting profit" I mean at least 20 % :)

[MikeeW]

It is not my intention to stray from the OP comments about money lending business. I wanted to add some comments about other forms of investment. I have had experience with a couple of them but never money lending. I would advise strongly against such an enterprise.

As to business adventures, for members who have some money to use, a bakery is a good choice for some. Personally, I have no interest in working in a bakery, whether I own it or not. The same is true for any business venture I may have here.

As to the amount of return on my investment, I don't track it that way. I have been able to recover my expenses and use the gain to make improvements. We do keep track, but not in the way I would something like a bank account or other investment.

I have a neighbor who was the local contact for jeuteng here. His wife is a school teacher, close to retirement. He gets some sort of commission for being the local guy to collect the bets of the wagers.. He has no other employment and this was his only "job". He finally gave in to temptation and when a local won the jeuteng for that week, maybe 40,000 or so. He just had to have it for himself. So, he just didn't pass along the winnings.

He had to quickly leave town and remained gone for over a year. During the time he was gone, his wife had to give the jeuteng winner her ATM card for her salary until the "debt" was repaid.

Not sure the business of money lending or gambling for a living is a way to survive.

[Thomas]

ok. I don't want to work in a production myself either (except perhaps in computer related or education ones) but businesses can need boss work too. A big part of Filipin small business owners don't have even basic knowledge about business economy... So I think better be involved in the leading ourselves at least in the beginning until see things functions good enough.

Not sure the business of money lending or gambling for a living is a way to survive.

More likely a way to die... :)

A big part of the murdered kanos I have heared of has been doing loan sharks, gambling or sex bar businesses. Such businesses are like magnets concerning harder criminals, so yes sure better stay out of them...

[Thomas]

Perhaps it's time for an update:

I don't know if it's true, but in http://www.pinoylawyer.org/  one claimed it's against the law to have higher interests than 2.5% per month. If that's true, it's remarcable most loans are higher...  :)

 

By the way, the law regarding fraudulent/bouncing checks is called estafa (Tagalog)

I did read - the law is changed. Bouncing checks aren't criiminal no more! 

 

This was 11 years ago. As of now, we have title to half the land. We do own half, clearly. This is because we processed a claim for part of the land which was actually not owned by the family ( had been a Highway right of way and we were able to get it from the government).

On one occasion, one of the siblings came to us and asked for their "share" of the amount we owed. They had a sick relative and needed the money. Sorry. If I give to one, then another and finally all five have the "share" where is the incentive?

Have you tried making that sibling pushing the others, so you get your title and they get the rest of the money?

[Dave Hounddriver]

*But I'm a gambler, but taking only CALCULATED risks, when I find the odds being good enough.

 

So its been almost a year since you posted this.  Did you get involved in money lending?  How profitable is it for you and is it still worth it for you?

[Thomas]

 

*But I'm a gambler, but taking only CALCULATED risks, when I find the odds being good enough.

 

So its been almost a year since you posted this.  Did you get involved in money lending?  How profitable is it for you and is it still worth it for you?

I'm still to injuried to move (but I still hope I can move around a half year from now, so I'm preparing sorting things and try to sell my house now.)

I will surely NOT do any normal money lending business, but big chance I will do some "harvest sharing" after I have settled there, if I have some money "left over" after I have started some own business.

 

So I haven't done any investments in RP yet myself, but I know some, who have done "harvest sharing" succesfully, of which two are foreigners.  But a Filipina earn much more by it  :)

Edited August 19, 2013 by Thomas