Non-bank financial institutions account for nearly half of loans extended each year to the country’s more than a million micro, small and medium-sized businesses.
Latest available data from the Asian Development Bank showed that loans to MSMEs by microloan organizations, pawnshops and other NBFIs topped $4.9 billion in 2020. While banks lent around $10.3 billion to this sector, the figure comprised just 2.4 percent of all loans banks extended to all their borrowers.
“As you can see, MSMEs remain underserved by banks. The huge gap is being bridged by NBFIs,” said Asialink Finance Corp. chief executive Robert Jordan, Jr. The gap is even more glaring considering MSMEs—around 996,000 as of 2020—make up over 99 percent of total businesses in the Philippines, Jordan said.
Jordan said the presence of NBFIs allowed MSMEs to weather the effects of the Covid-19 pandemic. “Last 2022, we released P10.5 billion in total loans, a 25 percent increase compared to our 2021 performance, to about 24,000 clients nationwide which are 70 percent MSMEs. It gave them access to loans at a time when they desperately needed access to funds to keep themselves afloat amid a very challenging environment,” Jordan said.
Asialink, formed in June 1997, has over 800 employees, thousands of independent loan consultants and partner dealers and more than 100 branches nationwide.