IF you are a small business owner in the Philippines, one question never goes away: Where can I find reliable capital to grow my business? For millions of micro, small and medium enterprises (MSMEs), access to financing often determines whether a business survives, expands, or simply stays afloat.
This challenge — and the opportunities within it — was at the center of discussions during the Philippine Finance Association’s (PFA) general membership meeting last Feb. 24 at One Shangri-La Place in Mandaluyong City. Industry leaders, regulators and financial institutions gathered to examine a critical theme shaping the sector today: trust, transparency and growth in the Philippine financing and lending landscape.
Forums such as those convened by the PFA increasingly serve as important venues where regulators and industry participants can discuss both innovation and consumer protection in a rapidly evolving lending sector. The discussions reflected the realities MSMEs face every day — limited access to bank financing, the rapid expansion of digital lending and the growing importance of responsible borrowing.
During the meeting, PFA President Carlo Enrico Lazatin highlighted a structural imbalance supported by data from the Bangko Sentral ng Pilipinas. MSMEs account for roughly 99.5 percent of business enterprises in the Philippines, making them the backbone of local commerce and employment. However, their share of the banking system’s loan portfolio remains small.
At the end of 2023, MSME loans stood at approximately P503 billion, representing 4.1 percent of total bank loans. By March 2025, the figure had increased to P543.8 billion, or roughly five percent. In other words, about 95 percent of banking system credit still flows outside the MSME sector. Closing this financing gap remains central to broader economic priorities as MSMEs continue to drive employment, regional economic activity and entrepreneurship across the country.
For many entrepreneurs, the numbers explain why securing traditional bank financing can be difficult. Collateral requirements, extensive documentation and conventional credit models often place smaller or younger businesses at a disadvantage. This gap is where financing companies, lending firms and leasing providers play an increasingly important role.
Unlike banks, financing and lending companies do not accept deposits and operate under different funding structures. Many rely on cash-flow analysis, alternative data and digital tools to evaluate borrowers. Their services support working capital, equipment purchases, receivables financing and other business needs, often with faster processing and more flexible structures for MSMEs.
But accessibility must go hand in hand with accountability. During the meeting, Sheara Lupango-Tamayo, director of the Financing and Lending Companies Department of the Securities and Exchange Commission, presented data underscoring the importance of consumer protection in the sector. As of January 2026, the Philippines had 3,549 registered financing and lending companies, of which 2,539 were active. Among these, 117 companies operated 178 online lending platforms.
With the rapid growth of digital lending, regulatory enforcement has also intensified. From 2025 to January 2026, the SEC revoked 437 registrations, issued 17 cease-and-desist orders, imposed fines on 148 entities and removed 159 unregistered online lending platforms from app stores and social media. Complaint data illustrates why these actions matter. In 2025 alone, regulators recorded 10,308 complaints involving unfair debt collection practices, including harassment. Other complaints cited high interest charges, violations of disclosure rules, advance fee scams and unauthorized loan disbursements.
For MSMEs, the message is straightforward: regulators are actively cleaning up the sector, but borrowers must remain vigilant. Before borrowing, entrepreneurs should verify SEC registration, review loan disclosures carefully and ensure that interest rates, penalties and collection practices are clearly explained.
Beyond enforcement statistics, the discussions during the meeting also highlighted a deeper reality: trust in financial institutions remains fragile. Insights from the Philippine Trust Study presented by EON President and Chief Operating Officer Malyn Molina showed that while Filipinos often report high levels of trust in institutions in surveys, that trust is frequently cautious and conditional.
Many Filipinos make financial decisions under pressure from rising living costs, inflation and economic uncertainty. In such an environment, borrowing decisions carry significant consequences. Trust in financial services is built not through marketing slogans but through consistent actions: transparent loan terms, ethical collection practices, reliable service and honest communication. It can also be quickly damaged by hidden charges, misleading advertisements, or abusive collection methods.
At the same time, digital financing has become deeply embedded in everyday commerce. Online platforms and installment-based credit schemes are increasingly used by Filipinos to purchase equipment, inventory, appliances and other essential assets. Access to financing has become faster and more convenient. But speed should never replace clarity. As financing options continue to expand, MSMEs can protect themselves by comparing the full cost of borrowing, reading disclosure statements carefully and building relationships with reputable financial institutions.
The financing and lending sector will continue to grow — particularly in digital formats — while regulatory scrutiny is likely to intensify. Institutions that prioritize transparency, governance and consumer protection will earn lasting credibility. For MSMEs, growth is not only about gaining access to capital. It is about choosing financial partners who operate with discipline and integrity. Access to financing will always matter. But in today’s financial landscape, trust — earned through transparency and responsibility — may be the most valuable capital of all.
Mariflor France Reyes is the executive director of the Philippine Finance Association.
