Visa, PhilGuarantee partner to widen MSME credit access

PAYMENT technology firm Visa has partnered with the Philippine Guarantee Corp. (PhilGuarantee) to help micro, small and medium enterprises (MSME) gain wider access to credit and financial services.

In a statement on Monday, Visa said they signed a memorandum of understanding to explore credit guarantee schemes that would support MSMEs in securing loans from partner financial institutions and adopting digital solutions.

“[MSME] deserve to have access to financial products and solutions that are responsive to their needs,” Visa Country Manager Jeffrey V. Navarro said in the statement. “Our collaboration with PhilGuarantee reiterates our support for the government’s vision of expanding financial inclusion.”

Under the deal, Visa will provide support through Visa Government Solutions, which includes services such as disbursement programs, payment acceptance and financial education initiatives.

PhilGuarantee, a state-run company, offers guarantee systems for priority government sectors, including MSMEs that often face barriers in accessing formal credit.

Many small businesses rely heavily on informal lenders due to insufficient credit history, exposing them to predatory lending practices.

A Visa study found that 44% of MSMEs in the Asia-Pacific region identified cash flow as their biggest challenge, while more than half reported cash reserves that would last less than six months.

Despite their importance to the economy, less than 10% of corporate loans in the region are extended to MSMEs.

Data from the Bangko Sentral ng Pilipinas showed that as of end-June, loans to MSMEs grew 10.8% year on year to P540.92 billion, or just 4.59% of banks’ total loan portfolio worth P11.78 trillion.

This fell short of the minimum 10% mandated under the Magna Carta for MSMEs, which requires banks to allocate 8% of their portfolio to micro and small businesses and 2% to medium enterprises.

Beyond credit guarantees, Visa has also invested in programs aimed at small businesses. The Visa Foundation launched a $100-million small business accelerator to expand financing opportunities for SMEs in the region including the Philippines.

It also runs the Practical Business Skills program, which trains entrepreneurs in cash flow management, digital payment integration and financial planning. — Aubrey Rose A. Inosante