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View from Taft Benel D. Lagua, as appeared in Business World Online, DISTRIBUTION ISSUES IN SME LENDING, “Any innovation that aims to solve the problems of access by small and medium enterprises (SMEs) to finance must overcome three concerns. First, SMEs are considered opaque firms that are very difficult to assess due to limited verifiable information. Second, the formal banking sector normally rewards account officers who generate returns/profits from big loans. Third, the (high) cost and effort necessary to process a small loan are the same as those needed to process a large loan.”

While the source was not referenced he states “[A]side from the social inclusion goals, there is evidence that increased lending to SMEs can aid financial stability, mainly by reducing the number of non-performing loans and lowering the probability of default by financial institutions”.

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