Acudeen, a fintech firm backed by 500 Startups, announces a partnership with Philippine-listed bank Rizal Commercial Banking Corporation (RCBC) to launch a new US$2 billion fund that targets the country’s micro, small, and medium enterprises (MSMEs) and farmers, DealStreetAsia reported.
Gil Beltran, the Philippines’ chief economist, said that the Opportunity Fund will give a platform where MSMEs are “a source of livelihood for millions of people, leverages technology to help businesses compete and grow while implementing regulations that reduce financial risks and boost confidence for MSME finance.”
Acudeen founder and CEO Mario Jordan “Magellan” Fetalino III added, “Acudeen’s role is to be the exchange of choice for distribution to MSMEs, lending our capability to assess and facilitate receivables discounting or factoring transactions.”
The fund is said to provide the underserved community, such as MSME and farmers, access to finance with the use of movable assets. It includes account receivables, crops, farm equipment, warehouse receipts, bank accounts, and future harvest as collaterals.
In the Philippines, MSMEs account for 99.6 per cent of the country’s enterprises and generate 61.6 per cent of employment, according to government data. Despite the high number, capital investment remains low, with MSME loans in the banking system accounting for only 6.2 per cent and 9.2 per cent share in total business loans.
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RCBC believes that MSMEs are reluctant to approach banks due to the lack of collateral and credit history for loan applications.
“This initiative seeks to give all stakeholders the opportunity to offer creative solutions to sustainability challenges, especially in empowering our entrepreneurs in exponentially growing our MSME sector,” said RCBC President and CEO Eugene Acevedo.
The pilot will cover Acudeen Technologies Inc, a receivable factoring exchange that facilitates the buying and selling of SME invoices through its platform. It will be covered by a sovereign guarantee through PhilGuarantee to ensure the quality of underwriting and receivables assets.
The launch of the fund comes after the Philippines passed the Personal Property Security Act (RA 11057), which qualifies movable assets as collateral for loans.
Established in 2016, Acudeen’s digital financing strategy is to finance SMEs ahead of time. It supports fast transactions from receivable uploaded to cash within five to seven days, giving MSMEs better control of their cash flow.
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