IFC Backs First Circle to Enhance Credit Access for SMEs in the Philippines

To expand digital financial services for small and medium-sized enterprises (SMEs) in the Philippines, the International Finance Corporation (IFC), a leading global development institution focused on the private sector in emerging markets and part of the World Bank Group, has invested $7 million in First Circle. First Circle is a pioneering technology company offering smart banking solutions to SMEs in the country. IFC was joined by Endeavor Catalyst, Fasanara Capital, and existing investors, Insignia Ventures Partners and Accion.

Patrick Lynch, CEO of First Circle, expressed excitement about the partnership, stating, "We are thrilled to welcome IFC, the pre-eminent investor in emerging market financial services, as new shareholders at this terrific inflection point in our company’s expansion. We are particularly excited by IFC’s deep technical expertise in helping fintech companies expand their services, allowing us to serve more SMEs in the country."

Since its launch in 2016, First Circle has provided funding to over 3,000 unique customers, with over two-thirds being SMEs accessing credit for the first time. The company offers innovative credit systems, including higher credit limits, flexible repayment options, and some of the lowest unsecured pricing in the market. Recently, First Circle has expanded its services to include fee-free business banking and payment solutions.

Jean-Marc Arbogast, Country Manager for the Philippines at IFC, commented on the investment, saying, "We are proud to be a part of this funding round for First Circle and help the company expand its operations to support more Filipino businesses, especially those accessing credit for the first time. Through this strategic investment, we aim to catalyze First Circle’s development of new products that will help foster better financial inclusion in the country."

The fintech sector in the Philippines has experienced significant growth in recent years. According to the 2023 Fintech Philippines report, the number of fintech companies increased from 115 in 2017 to nearly 30,000 by December 2022. Despite this growth, few companies focus on providing services specifically for MSMEs. Access to finance remains a challenge for smaller businesses, with credit penetration for SMEs in the Philippines standing at 2.2% of the country’s GDP in 2023, lagging behind regional peers.

Patrick Lynch highlighted the importance of First Circle’s work, saying, "First Circle’s customers are growing trading, manufacturing, and services businesses who are the center of their own ecosystem of employees and trading partners, and all the livelihoods they support. Our team is deeply motivated by our mission, our win-win customer relationships, and the multiplicative impact of our products. Our partnership with IFC is much more than just investment; it underlines our mission of economic empowerment and building for the long term."

With SMEs experiencing an average of 80% growth in their first two years as customers, First Circle’s funding is driving positive results, showcasing its critical role in SME success. IFC’s investment will enable First Circle to expand credit lines and offer smarter banking solutions to underserved SMEs.

Since 2018, First Circle has also partnered with the Department of Trade and Industry (DTI), supporting the agency’s goal of boosting SME competitiveness and growth. By providing accessible financing solutions and financial literacy programs, First Circle has helped equip SMEs with the necessary resources for success, aligning with DTI’s economic goals and IFC’s mission to empower this crucial sector.

DTI Undersecretary Blesila Lantayona acknowledged the impact of First Circle, stating, "The Department of Trade and Industry recognizes First Circle’s significant contribution in providing accessible financing to SMEs, which has directly supported our initiatives to boost economic activity and empower local businesses. Their commitment to financial inclusion aligns with DTI’s vision for a more competitive and resilient SME sector.