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From P50 investment to P20-million sales growth

Learn how microfinance helped L. Angeles Machineries Corporation sustain more than 50 years of business.
By Maricris Carlos |

PERSISTENCE.  L. Angeles Machineries Corp. founder Lamberto Angeles was only able to get the business started after borrowing P50 from a bank. In 2014, it raked in P20 million in sales. Photo by Dairy Darilag / Entrepreneur Philippines

 

 

 

Industrial machine manufacturer L. Angeles Machineries Corp. (Lamaco) may no longer have a problem finding capital these days. But that was not the case when it first set up shop in 1959.

 

In fact, the founder, Lamberto Angeles, was only able to get the business started after borrowing P50 ($1.07) from a bank, which he used as down payment for the lathe machine he needed to get his shop in Pasay City up and running.

 

His son, and now the company’s president and general manager, Leonardo Angeles, says the microloan was only the start. “Before he had his own business, he was already a machinist. He was a foreman at a big machine shop in Pasay City. He knows the ins and outs of the business so it was fitting to enter that industry too. As his projects got bigger, more customers came in,Angeles said in Filipino.

 

Eventually, his father was able to save another P50 ($1.07) to use as down payment for another lathe, the most essential tool in a machine shop, and hire a machinist.

 

Lamberto again took out a loan in 1969 to acquire a 350-square-meter property in Bacoor, Cavite, where the business is now based. Leonardo said that over the years, his father acquired neighboring lots in the area, so their factory now sits on a 7,000-square-meter property.

 

 

Growing

In fact, Lamaco has grown so big that it has gone beyond micro loans.

 

Ten years ago, Leonardo decided to borrow P500,000 ($10,697.57) from the Land Bank of the Philippines (Landbank) in order to buy new machines to replace their aging equipment, and to use as additional capital as they tried to grow the business.

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Eventually, Landbank offered Lamaco a standby credit line, which increases every year based on the company’s collateral and capacity to pay.

 

Leonardo said Landbank offered them a standby credit line because it was happy with the company’s financials. The standby credit line was good for one year, which the business can draw from any time. The credit line also allows Lamaco to enjoy better interest rates compared with a straight loan.

 

Related: How to make sure your business loan gets approved by the bank


Apart from the bank loans, Lamaco also took advantage of technical grants from the government. For instance, the company bagged a technical grant from the Department of Science and Technology (DOST) under the Small Enterprise Technology Upgrading Program, or SETUP, which allowed it to acquire a brand new lathe machine, which was crucial for its operations.

 

 

 

Now, Lamaco is a multimillion-peso business, hitting P20 million ($427,914.77) in 2014. Sales have been brisk because of the construction boom, as they supply steel-bending and shearing equipment to roofing manufacturers.

 

Additionally, Leonardo has also been able to expand the opportunities for the company. Since he is a government scholar and consultant, DOST regularly sends him to hold lectures in different parts of the country. This gave him the opportunity to network with potential clients.

 

It had a great impact to the business in terms of marketing,” he said. Now that roofing manufacturers have made it a practice to set up warehouses outside Metro Manila, they get more orders for their machines.

 

The company also supplies materials recovery equipment, such as plastic shredders and waste-management bioreactors, to local government units. They also fabricate machines based on specifications supplied by their clients.

 

His advice to business owners looking for capital to start their business? “Don’t be afraid to loan, you need it,” he said. Lamaco only borrows when it knows it has revenues coming in—easier in their case, since most of their projects are repeat orders from regular customers.

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Related: How to start a business with (almost) no money


Also, he advised to start with a small amount and make sure to check your capacity to pay. “You have to make sure that you use the loan for business purposes only. So many fail because they use it for personal use instead, usually to buy a car. Get a car once you earn,” he said.

 

 

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Maricris is the former managing editor of Entrepreneur Philippines magazine.

 

This article was originally published in the June 2015 issue of Entrepreneur Philippines magazine. 

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