Asialink secures $50 million loan from ADB for SME lending

MANILA, Philippines — Asialink Finance Corp. (AFC) has secured a $50-million loan from the Asian Development Bank (ADB) to be used to provide financing to more small and medium-sized enterprises (SMEs) in the country.

A document from the ADB showed that the $50-million loan was approved by the multilateral lender last Nov. 7.

AFC will use the ADB loan to expand lending for SMEs, including those owned by women.

While micro, SMEs account for 99.5 percent of the country’s total registered businesses and over 60 percent of employment, access to credit remains a problem.

Citing the Bangko Sentral ng Pilipinas’ 2021 Financial Inclusion Survey, the ADB said banks only accounted for four percent in terms of funding for MSME borrowers.

Access to financing remains a challenge for MSMEs as banks perceive lending to these businesses as risky due to the lack of financial statements and insufficient collateral.

The lack of access to financial services undermines MSMEs’ ability to drive economic growth as this makes it harder for them to recover from external shocks like natural calamities.

For the ADB, this situation can further exacerbate poverty.

The ADB expects the loan for AFC to contribute to the long-term goal of providing SMEs with access to finance to drive economic growth, cut poverty and reduce inequality in the country.

“The loan proceeds will help narrow the credit gap of SMEs and will allow AFC to lengthen the SMEs’ investment horizon and address their life-cycle challenges,” the ADB said.

AFC will be expanding its loan portfolio by building additional branches to increase its reach nationwide.

In addition, AFC will be using digital solutions to improve efficiency and turnaround time of loan application and approval.