The Securities and Exchange Commission said crowdfunding and initial public offerings will help fill the $220-billion credit gap in the Philippines.
It said during the Manila leg of the nationwide roadshow for micro, small and medium enterprises that crowd funding, IPOs and other capital market raising activities are some of the accessible and convenient means for businesses to secure funds for expansion.
The SEC, citing data from the International Finance Corp., said the country has an estimated $220-billion credit gap.
A survey conducted by the Asian Development Bank in 2020 also revealed that 47.5 percent or almost half of MSMEs used their funds or retained profits to survive the pandemic, while only about 4.8 percent obtained credit from banks.
“Most of [small businesses] rely on internal resources for their capital needs. While those who apply for traditional bank loans face tedious documentation, high interest rates, and mandatory collateral requirements,” SEC commissioner Karlo Bello said in his opening remarks during the event.
“Further, the recent economic slowdown due to the COVID-19 crisis has exacerbated our MSMEs’ poor financial position. Hence, in our continuous bid for financial inclusion, we recognize that there really is a need to broaden the financing instruments available for MSMEs,” he said.
Crowdfunding is a fundraising activity typically conducted by startups and SMEs, where the public can support or fund a business idea through an online platform.
The SEC said that as of December 2022, more than 200 businesses successfully raised capital through the platforms of crowdfunding firms Investree and Seedin Technology from more than 1,000 registered issuers.
SeedIn Technology’s platform saw a total of P1.42 billion raised funds for 296 projects.
Philippine Stock Exchange president Ramon Monzon and Investment and Capital Corporation of the Philippines president and chief executive Valentino Bagatsing also discussed the benefits of listing on the stock market for expanding one’s business.
The nationwide roadshow is part of the SEC’s effort to achieve its goal of having 888 companies tap the capital market for core fundraising by 2024.
About 627 companies or 70.61 percent of the target had listed and accessed the capital market as of end-May 2023.
These include companies listed on the PSE, non-listed PSE companies but are registered on the Philippine Dealing and Exchange Corp., companies registered through direct public offering and companies with pending IPO and DPO applications.