UnionBank, RCBC are finally betting on the Philippines’ ignored MSMEs

After almost a decade of skirting past a legally binding quota that required banks to provide a tenth of their loans to MSMEs—who make 99.5% of businesses in the Philippines—big banks are now starting to open their wallets to mom-and-pop stores. But it may be too little, too late

At least two big banks in the Philippines are putting up loan marketplaces for MSMEs in a bid to fill a huge financing gap

Meanwhile, microfinance NGOs have grown their loan portfolio with annual growth rate ranging from 13-29% pre-pandemic

Some fintech lending startups have also started to cover ground in locations where banks can’t service

It’s all hands on deck as Philippine MSMEs bounce back amid the COVID-19 pandemic

Every time Sam Navalta approached a big bank for a loan for her three-year-old car detailing business in Valenzuela City, Philippines, she had to find an alternative source of financing.

While Navalta and her business partner had saved half of the needed capital to operate the shop in 2018, to secure the rest, she went door-to-door to different big banks in the city, only to get rejected each and every time.

“In the end, we decided to ask a relative of mine who had a good credit standing to ask for a personal loan instead since she already has a relationship with another bank,” Navalta said.

AUTHOR

Elyssa Lopez

Based in Manila, Elyssa develops stories about businesses and their impact on the Philippine economy and culture. She was previously a staff writer for the Philippine versions of Entrepreneur and Esquire magazines, before freelancing full-time. Her bylines may be found on South China Morning Post and KrASIA.

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