Originating in 2015 as a platform connecting financial institutions and MSMEs, First Circle built a large network of businesses with significant supply chain needs, but saw limited financing being taken up by larger banks. Since 2019, the company has disbursed USD 200 million to over 3,000 SMEs, focusing on small and medium B2B enterprises with limited access to credit. Its average customer is an established SME seeking working capital, active in sectors such as services, trading, technology, healthcare equipment, transportation and food.
Good growth perspective
The landscape of small and medium enterprise (SME) digital lending in the Philippines has evolved rapidly over the past few years, driven by technological advancements, increased internet penetration, and a growing demand for quick and accessible financing solutions. Digital lenders are playing a pivotal role in bridging the financing gap that many SMEs face, particularly in a market where traditional banking services can be limited or cumbersome.
The adoption of digital lending solutions was significantly accelerated by the COVID-19 pandemic, which highlighted the urgent need for accessible financing options amid economic uncertainty. As SMEs tried to adapt to the challenges posed by the pandemic, many turned to digital lenders for quick financial relief and support. This shift has not only increased the visibility of digital lenders but also underscored the importance of fintech innovation in providing tailored financial solutions that meet the unique needs of SMEs.
Competitive edge
As one of the country’s leading MSME-focused digital lending platforms, First Circle serves as a model for other financial service providers and digitally-enabled companies, showcasing how a technology-driven approach can profitably extend credit to small businesses that have historically been excluded from formal financing. The company’s technology-driven underwriting and data-rich loan origination process ensure better asset and risk assessment, positioning the company well ahead of other marketplace lenders and most fintech peers. As a result, Frist Circle offers its customers competitive rates, higher credit limits, flexible repayment options, and the convenience of fast, primarily digital, operations.
Giovanni Zenteno, Investment Officer: “Filipino SMEs often face obstacles such as information asymmetry and high cost of funding which translate into underbanked enterprises. First Circle distinguishes itself by using data and technology to provide tailored financing to local businesses swiftly and at scale.”
Strategic fit
First Circle aligns with Triodos Investment Management’s financial inclusion objectives by targeting SMEs excluded from the financial ecosystem. The company aims to grow to upwards of USD 50 million in assets by year-end and is raising capital for growth and refinancing existing facilities. By providing a senior debt facility, our Financial Inclusion funds further diversify their portfolios geographically.
By providing loans at scale to underserved MSMEs, First Circle demonstrates the commercial viability of serving these smaller clients. This, in turn, is expected to catalyse broader participation in the MSME lending market - encouraging both traditional banks and non-traditional, technology-based lenders to enter and expand in this space - ultimately driving systemic change in the Philippine financial landscape.
Josh O’Donnell, Vice President Finance: “We are delighted to partner with Triodos as we continue our mission to provide every SME in the Philippines with access to globally excellent financial services. Triodos ran an exceptional investment process with clear timelines, and we look forward to meaningfully growing our relationship with them over the coming years.”