Empowering MSMEs through financing, digital tools, and upskilling

By Jomarc Angelo M. Corpuz, Special Features and Content Writer

It is often stated that micro, small, and medium enterprises (MSMEs) are the backbone of an economy, recognizing their contributions to employment, income generation, and economic growth. However, various challenges and roadblocks, such as access to capital, digital transformation, and a lack of capacity-building, have given rise to questions about the futures of these enterprises.

MSMEs made up 99.63% of the country’s 1.246 million registered businesses and provided nearly 67% of employment, amounting to about 6.35 million jobs, according to the latest numbers of the Philippines Statistics Authority. This demonstrates how a thriving MSME sector brings economic value and visible societal change.

“MSMEs are pivotal in poverty alleviation, boosting regional economies, and enhancing domestic resilience,” GCash for Business General Manager Jong Layug said in an email interview with BusinessWorld.

To maintain growth and help MSMEs thrive even more, Mr. Layug noted collaborations between the government and the private sector that could ensure that they are more included in national growth strategies. He noted, as an example, the Department of Trade and Industry’s partnership with GCash for Business. The partnership aims to establish GCash for Business hubs within Negosyo Centers as a means to educate merchants and provide onboarding assistance for prospective users to effectively use their platforms.

“The collaboration aims to empower MSMEs through digitalization, making business operations more efficient and seamless,” Mr. Layug said.

For example, merchants can now use the new GCash SoundPay device, which allows them to hear it when a customer pays in their store, providing them with verification that the payment has been accepted in real time.

GCash for Business is also offering PocketPay, a solution that turns the merchants’ phones into a POS machine capable of accepting debit or credit card payments backed by Mastercard and Visa.

Access to capital

GCash for Business General Manager Jong Layug stresses the need for MSMEs to use digital platforms, enabling their operations to become more efficient and seamless.

The World Bank bares that access to finance is one of the key constraints to growth for MSMEs. The international financial institution finds that the issue is the second most cited obstacle facing SMEs in growing their businesses in emerging markets and developing countries.

With MSMEs less likely to obtain bank loans than large firms, these enterprises often rely on internal funds, cash from friends and family, or even digital lending apps and wallets.

Mr. Layug emphasizes that there are basic financial products and services that can help MSMEs scale their businesses.

“Critical financial tools include affordable credit, savings, micro-insurance, digitized payments, and business analytics. These empower MSMEs to manage cash flow, protect against risk, and scale operations confidently,” he said.

However, while these tools are available, Mr. Layug mentions that they are often fragmented, costly, or too complex. These characteristics make these products seem out of reach for small businesses. He advocated for these solutions to be more accessible and affordable to help even the smallest enterprises grow and succeed.

“In the Philippines, bank lending remains far below the target set by the BSP (Bangko Sentral ng Pilipinas). As of end‑March 2025, loans to MSMEs were only 4.63% of banks’ total loan book versus the 10% mandate (8% for micro/small, 2% for medium). Fintech is stepping in to bridge it by using alternative data, digital KYC (know your customer), and embedded disbursement to reach merchants that banks can’t serve at scale,” Mr. Layug said.

This persistent financing gap highlights the need for more creative and digital lending strategies that bypass traditional roadblocks. This is how fintech solutions and digital financing are making a tangible difference.

“GCash for Business and Fuse Financing are widening the doorway to credit for MSMEs that banks still underserve. Instead of relying on traditional collateral and heavy paperwork, we use verified activity inside the GCash ecosystem to deliver instant, data‑driven micro‑loans straight to their wallets. That means faster decisions with right‑sized limits — removing the usual barriers that keep micro and small enterprises out,” Mr. Layug said, explaining how fintech like theirs can help MSMEs.

Digital transformation

Digital transformation has shown undeniable benefits that can lead to better business outcomes. A study from Forbes magazine shows that digitally mature companies are 23% more profitable than their less mature peers. Despite this, many Filipino MSMEs remain hesitant to embrace technology due to perceived complexity, high costs, and other varying reasons.

“While more business owners are curious about digital tools, a lot of them still feel these solutions are too complex, expensive, or simply not made for them. As such, many still resort to manual ways of doing things, which are more prone to human error and even tedious,” Mr. Layug said when asked about the barriers these enterprises face when going digital.

For prospective MSMEs who are seeking to overcome these barriers, he advises to start with solutions that are both practical and scalable for small enterprises. Mr. Layug stressed that the goal is to equip MSMEs with tools that both simplify day-to-day operations and open doors to wider markets and more efficient workflows.

“Priority tools include secure e-wallets and digital payment acceptance, as well as inventory management and e-commerce platforms. These boost reach, streamline operations, and improve responsiveness to market demands,” he said.

Capacity-building

Upskilling and capacity-building are other areas where MSMEs can build resilience to be better prepared for the future. A report by the World Economic Forum in 2023 believes that 44% of workers’ skills will be disrupted in the next five years and that six in 10 staff members will require training before 2027.

To meet these challenges head-on, Mr. Layug suggests the strengthening of competencies that directly support modern business operations and competitiveness.

“MSME owners should develop digital literacy, financial management, online marketing, and data analytics capabilities, in addition to cybersecurity awareness and adaptability,” he said.

Building these capabilities is not solely the responsibility of business owners and the private. Across the country, public agencies, development organizations, and private players are rolling out programs to help MSMEs modernize and compete.

“There’s growing support — government programs, NGOs, and private initiatives (including GCash’s partnerships for digital and financial literacy). However, scaling and stronger coordination are needed for nationwide impact,” Mr. Layug said.

MSMEs, as the backbone of the economy, also need support to carry and continue the growth of the nation through accessible financing, practical digital tools, and targeted skills development. With stronger collaboration across sectors, these enterprises can survive today’s challenges, drive inclusive and sustainable economic growth for the Philippines, and perhaps, scale to bring more opportunities to Filipinos.