05/09/2025
The law mandates that banks allocate 10 percent of their loan portfolios to MSMEs, yet as of June 2024, the actual share was only 4.52 percent (Bangko Sentral ng Pilipinas; Brigada News, 2024). This gap underscores systemic barriers—perceived risk, lack of collateral and credit history, weak financial records, and regulatory loopholes that make it easier for banks to pay fines than extend credit (Tribune, 2023; PIDS, 2024).
Bridging this divide requires more than compliance. We must expand credit guarantee programs, incentivize banks that exceed quotas, and support MSMEs in formalizing their operations to build credible credit histories. At the same time, we should link financing to business models with proven resilience and returns, such as franchising. By democratizing access to franchise opportunities, we give MSMEs a pathway to structured operations, brand equity, and higher chances of survival—benefiting both lenders and entrepreneurs.
Financing MSMEs is not just about risk management; it is about building inclusive growth models where capital flows into businesses designed to succeed. With the right policies, banks, government, and private sector can work together to close the financing gap and unlock the full potential of Philippine enterprises (World Bank & PIDS, 2024).