BANKS released more loans to micro and small enterprises (MSEs) in the fourth quarter of 2025, though still below the required minimum amounts, according to data from the Bangko Sentral ng Pilipinas (BSP).
The Magna Carta for MSMEs (micro, small and medium enterprises), or Republic Act 6977, mandates banks to set aside at least 8 percent of their total loan portfolio for MSEs, and at least 2 percent for medium enterprises (MEs).
The mandatory credit allocation expired in June 2018, 10 years after the law was enacted. However, the BSP continues to track banks’ lending to MSMEs as part of its regular supervision and policy review.
As of end-December 2025, Philippine banks should have lent P971.47 billion to MSEs, and P242.87 billion to MEs, based on a total loan portfolio of P12.14 trillion.
However, only P238.45 billion was loaned to SMEs, or P733.02 billion short of the minimum amount. But it’s higher than the P225.17 billion recorded in the previous quarter and the P217.12 billion in the same period in 2024.
On the other hand, the P336.35 billion in loans released to MEs exceeded the P93.49 billion minimum. It was also more than the P311.34 billion and P204.88 billion three months and a year earlier, respectively.
Universal and commercial banks, which accounted for the bulk, or P11.03 trillion, of the industry’s total loan portfolio, were supposed to lend P882.02 billion to MSEs and P220.51 billion to MEs.
Their compliance as of December 2025 was at P152.96 billion for MSEs, or P729.07 billion short, while P276.23 billion was lent to medium firms — which was P55.73 million more than required.
Thrift banks, meanwhile, lent P49.01 billion to MSEs, or 3.88 percent of their total loan portfolio of P896.72 billion. Credit to MEs amounted to P38.97 billion, or 4.43 percent of their lending book.
Only rural and cooperative banks complied with the lending quotas, with loans to MSEs reaching P35.75 billion or 20.13 percent of their P177.59-billion portfolio, while loans to MEs stood at P21.08 billion or 11.87 percent.
Likewise, digital banks lent just P590 million in loans to MSEs, or 1.69 percent of their P43.8-billion loan portfolio. Loans to MEs were at P70 million, a mere 0.15 percent of the total.
Firms with assets not exceeding P3 million are classified as microenterprises. Small businesses are those whose assets do not surpass P15 million, while medium-sized enterprises have assets worth over P15 million to P100 million.
Banks must submit to the BSP their quarterly reports of released loans. Penalties are based on the percentage of undercompliance, which can go up to P500,000 for zero compliance.
