Microfinance & Microloans

Small loans from BSP-regulated microfinance institutions for micro-entrepreneurs, sari-sari store owners and low-income individuals.

Who microfinance loans suit

Microfinance loans are designed for micro-entrepreneurs, sari-sari store owners, market vendors and other low-income individuals who need a small amount of working capital but cannot meet a commercial bank's documentation or collateral requirements. BSP-regulated microfinance institutions, including microfinance-oriented rural banks and non-government-organization-linked lenders, specialize in serving this segment with simplified, often group-based or character-based lending methodologies.

Eligibility basics

Microfinance borrowers typically need to be Filipino citizens, often organized informally into borrower groups that provide mutual guarantee in place of collateral, and must demonstrate some form of existing income-generating activity, such as a small retail stall or home-based business, rather than a formal payslip. Loan sizes are usually modest, commonly ranging from a few thousand pesos up to around PHP 150,000 depending on the institution and the borrower's repayment track record, with amounts typically increasing for repeat borrowers who repay reliably. Microfinance institutions operating as banks are supervised by the BSP, while standalone microfinance NGOs may instead be registered with the Securities and Exchange Commission.

A cost example

A microfinance loan of PHP 20,000 repaid weekly or monthly over a term of several months at a typical microfinance effective rate would generate total interest and service fees that are higher per peso than a bank loan, reflecting the higher cost of serving small, frequent, often-uncollateralized loans; borrowers should always ask the institution for the total amount repayable, not just the stated rate, to understand the true cost.

How to apply

First, identify a BSP-supervised microfinance bank or a reputable, properly registered microfinance NGO operating in your area, ideally one with an existing presence among other small business owners you know. Next, prepare basic identification and a simple description of your business activity, since formal financial statements are rarely required at this loan size. Then attend any required orientation or group-formation session, as many microfinance programs use peer groups as a substitute for traditional collateral. Finally, borrow only the amount your business cash flow can comfortably support repaying on the lender's schedule, since microfinance institutions use consistent on-time repayment, more than the initial loan size, to determine whether you can access larger amounts in the future.