Micro, small, and medium enterprises (MSMEs) in the Philippines require tailored financing and broader business support to achieve sustainable growth, according to Suhail Y. Khan, Director for Private Sector Financial Institutions at the Asian Development Bank (ADB).

MSMEs represent 99.5% of registered establishments in the Philippines, employ over 60% of workers, and contribute more than one-third of the country's GDP. However, they account for less than 4% of total bank loans, with over 83% of MSME lending concentrated in Metro Manila. Khan noted that the national figures hide a regional financing gap estimated between P67 billion and P180 billion.

Obstacles to accessing finance include a lack of collateral, audited financial statements, long operating histories, and formal credit records. Additionally, the cost of monitoring small loans discourages traditional lenders. Khan suggested that MSMEs need longer loan tenors, revolving working capital, and movable-asset lending. He also noted that digital platforms and alternative credit-scoring models could use transaction data to lower information barriers.

Credit Guarantees and Support

Alberto E. Pascual, President and CEO of Philippine Guarantee Corp. (PhilGuarantee), stated that credit guarantees can encourage lenders to support businesses that do not meet traditional requirements. By the end of 2025, more than 90% of PhilGuarantee's credit guarantees were for MSMEs. The corporation has issued approximately P13 billion in cumulative MSME guarantees for about 71,000 borrowers and P6 billion in guarantees for 40,000 small farmers and fisherfolk.

Wally Don G. Calderon, Vice-President of Small Business Corp. (SB Corp.), reported that direct borrowers increased from just over 2,000 before the pandemic to nearly 90,000. However, he cautioned that some quickly approved digital loans carry high interest rates. SB Corp. provides collateral-free business loans of up to P3 million and products for women and young entrepreneurs.

Aian Guanzon, chief marketing officer of Global Dominion Financing, Inc., observed that 20% of businesses studied were creditworthy but initially declined due to a lack of traditional proof of income. He suggested that electronic-wallet transactions and supplier receipts could serve as alternative data for assessing cash flow.