The lending industry has steadily contracted since the start of the pandemic, with modest signs of recovery only starting to show in September this year. It’s a good sign, but progress is sluggish as banks remain understandably cautious with their loan books.
Amid this seemingly unanimous apprehension, First Circle—the financial technology company that supports growing SMEs—announced that it will cut interest rates for their flagship loan product to as little as 1.39 percent per month. The move comes as part of an aggressive plan to provide business loans at 0.99 percent by 2022, which would be some of the cheapest non-collateral financing available to local SMEs.
When asked what prompted the decision, First Circle chief executive Patrick Lynch said: “We have seen first-hand the strength and resilience of business owners across the Philippines who have stared defeat in the face and come out stronger on the other side”.
“Families and communities across the Philippines rely on these businesses for their livelihood, and today First Circle is taking a huge step to ensure SMEs can bounce back quickly,” said Lynch.
In addition to First Circle’s ambitious plan to drop rates below 1 percent by 2022, they are planning to make more than P2 billion of fresh capital available for SMEs before the year ends—a move that stands in stark contrast to what’s going on in the rest of the lending sector.
“Making it out of this recession is going to be a long game, and we know that. But the -ber months always present businesses with unique opportunities that just can’t wait. We are confident in our underwriting capabilities, so we don’t feel the need to be as conservative as other lenders. Our customers are smart business owners who have a very healthy mindset towards taking credit,” said First Circle head of customer success Marcus Erlano.
“They are constantly finding opportunities for growth despite less-than-ideal conditions, so rather than standing back and letting them fend for themselves, we want to be there when they need us most,” said Erlano.
The company said these are just the first of many more exciting things to come, as they continue with their mission to expand economic opportunities for SMEs in Southeast Asia.