According to several surveys, approximately 20% of all households in the Philippines depend on income from small-scale enterprises or microenterprises. Microenterprises, like all enterprises, need access to quality financial services if they are to prosper and grow. Yet microenterprises often have difficulty accessing formal financial services because of the smaller size of capital they demand. Microenterprises operate in areas far from the city or municipality proper, further complicating their ability to access financial services.

One of the objectives of the MABS Program is to demonstrate to banks that they can make a reasonable profit providing loan and deposit services to microenterprises so that banks will make providing services to the microenterprise sector a permanent and significant part of their business.

Microfinance Defined

Microfinance refers to the provision of financial services including credit, savings, insurance and payment services.

Microfinance activities usually involve:

    • Small loans, typically for working capital
    • Informal appraisal of borrowers and investments
    • Access to repeat and larger loans based on repayment capacity and previous repayment performance
    • Streamlined loan disbursement and monitoring
    • Secure savings products

Microfinance clients are smaller-scale entrepreneurs including food and product vendors, farmers, buy-and-sell or sari-sari stores owners, services providers (hairdressers, service tricycle operators), small restaurant operations, and artisans.


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