MSMEs in the Philippines

Security Bank launches new banking segment for MSMEs

Lance Spencer Yu

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Security Bank launches new banking segment for MSMEs
Under the newly launched Business Banking Segment, clients can avail of customized business loans and open a checking account with a minimum maintaining balance of P25,000 and free digital banking services

MANILA, Philippines – Security Bank is set to pivot toward serving micro, small, and medium enterprises (MSMEs) with the launch of its Business Banking Segment, which will offer banking services and loan products tailored to smaller businesses.

At the launch on April 18, Tuesday, Security Bank senior vice president John David Yap said that the bank has identified MSMEs as a priority segment.

“In the Philippines, MSMEs comprise 99.5% of all businesses, and are responsible for close to 65% of total employment, contributing to 40% of GDP. However, these businesses remain underserved by formal banking institutions with high balance requirements for their business accounts and challenging loan application client journeys,” Yap, who also heads the Business Banking Segment, said.

The universal bank intends to capture 20% of MSMEs in the next three to five years. Yap said that the goal was for the Business Banking Segment to be a “relevant contributor in Security Bank in terms of revenues.”

“From a market standpoint, we hope the Business Banking Segment … will fall in the top three of banks where MSMEs will take their financial services,” he said.

Under the Business Banking Segment, MSME clients can open a BusinessPlus checking account that comes with a checkbook, pass book, statement of account, and up to five MasterCard Debit Cards. The account has a minimum maintaining balance of P25,000, lowered from the bank’s previous P50,000 requirement. The maintaining balance is also waived for the first three months of account opening.

BusinessPlus clients also have free access to DigiBanker to view their account balance and pay bills online.

Security Bank is also offering loan products, such as a collateralized Business Mortgage Loan that allows clients to loan up to P30 million with monthly installments over 20 years. The bank also has a collateral-free Business Express Loan up to P5 million.

“We have very simple requirements. For sole proprietorship, we only need a DTI (Department of Trade and Industry) registration, and for corporation and partnership, we require the registration with SEC (Securities and Exchange Commission). Along with that, we require the borrower to sign up an application form with us and submit the proof of their business, such as ITR (income tax receipts) and bank statements,” Marjorie Esplana, head of Business Banking Segment sales, said.

Esplana added that they can render a decision in 15 days for a Business Mortgage Loan and five days for a Business Express Loan.

In profiling clients, Yap clarified that the bank typically transacts with those enterprises with at least two years of track record, highlighting that they are “very selective” with startups. 

“The smallest loan right now is P500,000. So, anyone who does not qualify for a P500,000 loan, we suggest that they get served by our retail banking people because they’ll be underwritten as individuals,” Yap said. “It’s tough. If we underwrite them, baka babagsak sila sa criteria namin (they might fail our criteria), especially if they don’t meet the P500,000 cutoff.”

MSMEs comprise the overwhelming majority of businesses (99.58%) in the country, according to 2021 data from the DTI. Of the 99.58%, micro enterprises constitute 90.54% of total establishments, followed by small enterprises at 8.63%, and medium enterprises at 0.41%.

Under Philippine law, an enterprise is classified as micro if it has up to P3,000,000 in assets, small if it has between P3,000,001 to P15,000,000 in assets, medium if it has P15,000,0001 to P100,000,000 in assets, and large if it has P100,000,001 and above in assets. –

The potential of Filipino MSMEs to grow is stronger than ever. Here’s what can be done to support them.

The potential of Filipino MSMEs to grow is stronger than ever. Here’s what can be done to support them.

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.