International Finance Corp. (IFC) said it is providing P500-million loan to Esquire Financing Inc., the fourth largest non-bank financing institution (NBFI) in the country, to increase access to finance for smaller businesses, particularly women-owned enterprises.
In a statement, IFC said on Friday, May 6, the P500 million worth of financing to Esquire is part of IFC's Base of the Pyramid (BOP) program and is IFC’s first engagement with an NBFI in the Philippines. IFC is the investment arm of the World Bank.
“The funding will help drive the economy, creating jobs, and accelerating post-Covid recovery in the country,” IFC said.
“The funding will allow Esquire, a market leader in the unsecured small and medium enterprises (SME) loan segment, to grow its loan portfolio and better serve women-owned SMEs (WSMEs) during and after the global pandemic,” IFC said.
The entire proceeds of the loan will be earmarked for on-lending to WSMEs, which have been severely affected by Covid-19.
Rajan Uttamchandani, Esquire chair and chief executive officer said IFC’s support comes at a critical time when long-term finance for NBFIs is scarce in the market.
Esquire differentiate itself from other NBFI and bank competitors as it focuses exclusively on small businesses.
“IFC’s loan will help us scale up our business and grow the WSME share of our client base to 67 percent over the next three years. This will allow us to promote market competitiveness, helping the country build back better,” Uttamchandani said.
Micro, small, and medium enterprises (MSMEs) are the economic backbone of the Philippines, accounting for 99.5 percent of registered businesses—30 percent of them women-owned MSMEs—and around 63 percent of employment in 2020.
Yet, limited access to finance deters their growth. In response, IFC, through its advisory services, with support from the Australian government, will help create a robust institutional environment by strengthening EFI’s risk management framework.
“By supporting a leading NBFI and BOP financier amid a challenging environment, IFC will contribute toward narrowing the financing gap in the country, especially through additional loans to women entrepreneurs impacted by the pandemic”, said Jean Marc Arbogast, IFC Country Manager for the Philippines.
“We are optimistic that IFC’s loan to Esquire will send a positive signal, strengthening confidence in the NBFI sector, an enabler of economic growth,” Arbogast said.
IFC’s BOP program is an initiative to help financial services providers deliver funding to small businesses, informal enterprises, and low-income households that have been hit the hardest by the lockdowns and economic slowdown caused by the Covid-19 pandemic.
The initiative is an expansion of the $8-billion Fast-Track CovidFacility that IFC launched in 2020 as part of the World Bank Group's response to the pandemic.