Small, and medium enterprises (SMEs) continue to face barriers that hinder them from scaling their businesses as they often lack the requirements set out by formal financial institutions in accessing capital to grow and manage their day-to-day operations or inventory to fulfill new business orders.
Recognizing this gap, Impact Pioneers Network launched its Gender-Smart Working Capital Facility to help SMEs access collateral-free, short-term loans of PHP 250,000 upwards. The working capital loans will be available to SMEs addressing social and climate challenges and will bring together key lending partners from the Network.
Impact Pioneers Network is an impact investing network that catalyzes local capital to deploy to high-potential impact enterprises for their growth needs. In addition, the Network supports enterprises through customized incubation and technical assistance preparing them for their next level of growth. By bringing together stakeholders, capital, and enterprises, the Network seeks to address key gaps in the Philippine social-enterprise ecosystem.
xchange Director and one of the co-leads of the Impact Pioneers Network Love Gregorie Perez, emphasized that “many early-stage impact entrepreneurs are not able to access financing from banks and other financial institutions, hence limiting their growth.”
“The hurdles include the required number of years of profitability and having immovable assets as collateral,” Perez said. “ We understand that SMEs need working capital to manage cash flow requirements arising from long production and sales cycles as well as long credit terms extended to their customers, fund inventory in response to increasing demand for their products, and finance purchase orders.”
But Perez explained that early-stage impact enterprises have the capacity to pay for working capital debt and are able to provide other forms of recourse aside from collateral. Thus, the new debt facility meets the needs of both entrepreneurs and capital providers seeking both a return on their capital as well as a return on impact.
The Working Capital Facility will specifically target, fund, and support enterprises led by women and other underrepresented founders to address equity in the investing sector.
“As a Network, we apply a gender lens across our work and have committed to building a portfolio that is majority women-led. We are also keen to support other underrepresented founders who may come from outside the big cities, or from communities that are often overlooked,” co-lead of the Impact Pioneers Network Priya Thachadi said.
“It’s important for us to acknowledge and understand the barriers that founders face from different backgrounds. We see many enterprises with strong potential but are constrained by lack of working capital, growing slower than they can. We have brought together lending partners who are committed to supporting and growing impact enterprises solving the most urgent social and climate issues in the Philippines.”
MSMEs play an important role in the economy, accounting for 99.5% of the total establishments and 62.8% of the total labor force. The sector contributes 35.7% of the total value of the Philippine economy.
The Working Capital Facility will support social impact enterprises with at least one year of business operations in the Philippines; duly registered with SEC, DTI, and BIR; with demonstrable impact on the UN Sustainable Development Goals (SDGs); and with capital needs of PHP 250,000.00 or more.
Women and under-represented founders are highly encouraged to apply.
Interested social impact entrepreneurs must send an Expression of Interest at bit.ly/ImpactPioneersLoan. Eligible applicants will be asked to submit the necessary documents to complete the process.
The deadline for submissions is March 31, 2023. For more information, contact team@impactpioneers.ph.