Homegrown non-bank Asialink Finance Corp. (AFC) has secured a total of at least $200 million (over P11.7 billion) in loans from two multilateral lenders to support its small business lending in the Philippines.
Minutes of an Oct. 9 meeting of the Washington-based International Finance Corp. (IFC) showed its board of directors green-lit a senior loan with an aggregate amount of as much as but not greater than $150 million for AFC.
The IFC's financing package for AFC is composed of an A loan of up to $100 million that shall be disbursed in US dollars or its Philippine peso equivalent and to be committed across two tranches, plus a B1 loan of as much as $50 million for the participants' account, documents showed.
The World Bank Group's private-sector arm will also manage client risks on behalf of AFC, via a cross-currency swap for a loan equivalent exposure (LEQ) amounting to a maximum of $7 million, it said.
Meanwhile, the Asian Development Bank (ADB) last Nov. 7 approved a $50-million loan to Asialink, according to the Manila-based lender's website.
Documents back in August showed that Asialink sought ADB project financing to expand its small and medium enterprise (SME) lending, especially among women entrepreneurs, in the country.
"The loan proceeds will help narrow the credit gap of SMEs and will allow AFC to lengthen SMEs' investment horizon and address their life-cycle challenges. The project will contribute to a long-term outcome for providing SMEs with access to finance to drive economic growth, reduce poverty, and reduce inequality," the ADB document read.
"This will be supported by building additional branches to increase its reach nationwide and the use of digital solutions to improve efficiency and turnaround time of loan application and approval," it added.
The ADB noted that Philippine SMEs have limited financing access, which it blamed on complex lending procedures, reliance on immovable capital, as well as the lack of information about available financial services.
As of end-March this year, almost two-thirds of AFC's loan portfolio are composed of SME loans, while the remainder are its clients' personal borrowings for new and used car purchases.
More than two-fifths of AFC's borrowers are women.
"AFC has a good reputation, a wide operating network, an extensive on-the-ground presence, and the availability of digital payment systems which are important in reaching the most underserved SMEs. This will help SMEs improve their businesses and make them more resilient therefore reducing vulnerability and poverty risks," according to the ADB.