The incubation-graduation model for SME finance supplementation in the Philippines

Benel P. Lagua

College

Ramon V. Del Rosario College of Business

Department/Unit

Management and Organization Department

Document Type

Article

Source Title

Journal for SME Development

Volume

3

First Page

55

Last Page

75

Publication Date

3-2007

Abstract

In both the developed and developing countries, the SME sector is recognized as an important driver of the economy for its potential contributions to poverty alleviation and job creation. However, as identified in many existing literature, SMEs are constrained in attaining their highest productive capabilities due to financial constraints and lack of access to credit. This has led many governments to pay attention to the sector and provide necessary assistance particularly in the area of financing. In the Philippines, a specialized government financial institution, the Small Business Guarantee and Finance Corporation (SBGFC), or the Small Business Corporation (SBC) for short, was created to cater to the funding needs of SMEs. Thus, the agency is called the "Credit Champion for SMEs" as it provides the credit needs of small businesses necessary to support their business operations and consequently so that they become globally competitive. Since its creation, SBC, with its strong commitment to serve the SMEs, has introduced an intervention scheme anchored around an incubation-graduation model that targets SMEs in their product life cycle stage. SBC continues to find ways to improve the condition of the sector for which it was intended to serve, by introducting innovations expected to reach its various clientele.

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Disciplines

Finance and Financial Management

Keywords

Small business—Philippines—Finance; Government aid to small business—Philippines

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