BANKS play a critical role in helping small and medium enterprises (SMEs) gain access to financing. However, in a country whose economy is pumped by the small-scale players like the Philippines, a big number of these enterprises remain unserved.

Metrobank SME head Godofredo V. Cruz revealed that only 19.1 percent of of SMEs in the country have borrowed from the banks.

“As of 2012, there are 944,897 business enterprises in the Philippines. This could have doubled now and MSMEs (including micro) represent 99.6 percent of these enterprises or equivalent to 940,886 MSMEs,” Cruz said in his presentation during the recent Cebu Entrepreneurship and Investment Summit held on Saturday at SM City Cebu.

According to the official, there are several reasons why there remains to be unbanked SMEs. Surprisingly, most of these are a matter of perception—thinking that banks are for the big players only.

First, Cruz said most SMEs are intimated by banks, thinking that these only serve the big businesses and those requiring huge loan amounts.


Others, although aware of available opportunities from the banks, still choose to seek the services of the informal sector like loan sharks. Top reasons, according to Cruz, include the banks’ bothersome financial requirements and the sluggish release of loans, unlike the informal ones that promise immediate access but ask for high interest.

“Banks used to be structured to serve the big businesses. But we have been enlightened two years ago that SMEs hold a big potential,” Cruz said.

It was two years ago when Metrobank SME was established, a special segment to serve the country’s SMEs.

According to the official, the bank offers three SME loan products, namely: the SME Puhunan Loan which can be used by manufacturers, distributors, traders, exporters and contractors to finance their working capital requirements, the SME Agri Business Loan to finance projects like contract growing for poultry or hogs, fish and aqualture production, and crop production and trading among others, and the Franchise Financing for those who are interested to become franchisees.

For this year, Metrobank SME has allocated an incremental budget of P3 billion for these types of loans. Fifty-one percent of the amount has already been used.


Through Metrobank SME, one can borrow for a minimum of P1 million up to P20 million, subject to existing credit policies.

Since it was estabslihed, Metrobank SME has served 3,400 accounts and around 600 enterprises were serviced as of April this year.

In the Philippines, 32 percent of the gross domestic product is generated by MSMEs. Central Visayas has the fourth largest population of these enterprises based on the country’s 2012 data at 65,637.

As defined by Republic Act 9501 or the Magna Carta for MSMEs, micro enterprises have an asset size of up to P3 million, small enterprises have assets worth P3 million to P15 million, while medium enterprises have an asset size of P15 million to P100 million.

Large enterprises in the country represent 0.4 percent of the total number of business enterprises in the country.

Banks, under the law, are required to allocate eight percent of their total loan portfolio to micro and small enterprises, while two percent for medium enterprises.

Cruz said the creation of Metrobank SME is not only a form of compliance to the law, but the bank’s commitment to further the growth of SMEs.