Nonbank lenders bridge funding for small businesses — Asialink

NONBANK financial institutions (NBFIs) have been stepping in to provide the funding needs of small businesses, the head of a financing firm said, citing the double-digit growth of loans recorded last year.

“MSMEs (micro-, small-, and medium-sized businesses) remain underserved by banks. The huge gap is being bridged by NBFIs,” said Asialink Finance Corp. Chief Executive Robert B. Jordan, Jr. in a media release on Tuesday.

He described the gap as “glaring” based on the composition of MSMEs as against the country’s businesses, which he placed at 99% or 996,000 as of 2020.

Mr. Jordan said that in 2022, NBFI’s released P10.5 billion in loans, or higher by 25% compared with the earlier year’s level. The funds reached 24,000 clients, 70% of which are MSMEs, he said.

“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,” he added.

In the media release, Asialink cited data from the Asian Development Bank showing loans to MSMEs by microloan organizations, pawnshops, and other NBFIs reaching $4.9 billion in 2020. It said that banks in comparison lent about $10.3 billion to MSMEs or just 2.4% of all loans they extended to borrowers.

The company also said that among Southeast Asia’s largest economies, the Philippines had the least funding support for MSMEs in terms of bank loans.

Formed in June 1997, Asialink has been serving the unbanked and underserved sector, Mr. Jordan said. It started with a capitalization of P3 billion and has since grown to employ 800 people through more than 100 branches nationwide.

Asialink said it has been focusing on MSMEs that need loans using their used vehicles as collateral.