MSME Lending Expands Nearly 11% in First Half of 2025

Bank lending to micro, small, and medium enterprises (MSMEs) in the Philippines rose by 10.8 percent to P540.92 billion as of end-June 2025, reflecting continued credit growth for businesses that form the backbone of the economy, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Loans to micro and small enterprises (MSEs) reached P220.55 billion, while loans to medium enterprises (MEs) amounted to P320.37 billion. Medium enterprises benefited strongly from bank support, with actual lending surpassing the 2 percent benchmark set under the Magna Carta for MSMEs.

Breaking down the figures, universal and commercial banks accounted for the bulk of the loans, extending P152.43 billion to MSEs and P259.58 billion to MEs. Thrift banks also contributed significantly, with P34.17 billion for MSEs and P40.41 billion for MEs. Digital banks provided P590 million to MSEs and P60 million to MEs.

Rural and cooperative banks stood out for exceeding both mandated lending requirements, channeling P33.35 billion to MSEs and P20.31 billion to MEs. This performance highlights the critical role of countryside banks in supporting grassroots entrepreneurs and local businesses.

Under the Magna Carta for MSMEs, banks are required to allocate at least 8 percent of their total loan portfolio to MSEs and 2 percent to MEs. While lending to micro and small firms still fell short of the target, the steady rise in overall lending reflects growing opportunities for enterprises to access financing.

Analysts said the continued expansion of credit to MSMEs is a positive indicator of resilience in the business sector. With improved access to funding, small and medium enterprises are expected to strengthen their role in job creation, innovation, and regional growth.

The BSP reaffirmed its commitment to work with financial institutions in expanding MSME financing, noting that lending growth is a key driver of inclusive economic recovery.