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Philippine fintech First Circle has secured a $4.9 million credit line from Cathay United Bank's Manila branch to strengthen funding for working-capital loans, business loans and solar financing amid rising demand. First Circle, a Securities and Exchange Commission-regulated financing company, provides unsecured online credit lines and loans up to 20 million pesos ($325,000) to small and medium enterprises. The company has extended 16 billion pesos ($260 million) in loans to over 5,000 Philippine businesses. Small-business credit access remains constrained in the Philippines, with SME credit penetration at just 2.2% of GDP in 2023, according to the Asian Development Bank SME Monitor 2023 cited by the International Finance Corporation. For Cathay United Bank, which opened its Manila branch in 2015, the transaction expands its corporate banking activity in the Philippines.

First Circle lands US$4.87M from Cathay United to expand Philippine SME loans. New financing gives First Circle fresh capacity to meet rising demand for working capital, business loans, and solar finance 25 May, 2026 First Circle, a Philippine financing company that specialises in lending to small and midsize enterprises (SMEs), has secured a 300 million pesos (US$4.87 million) credit facility from Taiwan-based Cathay United Bank. The deal marks the firm's first time working with a Taiwanese bank and comes as demand for short-term working-capital loans, business loans, and solar financing in the Philippines shows signs of strengthening. First Circle is not a bank but a Securities and Exchange Commission-regulated financing company. It offers unsecured online lines of credit and loans of up to 20 million pesos (US$325,000) to SMEs. Since its founding, the firm says it has extended about 16 billion pesos (US$260 million) in credit to more than 5,000 Philippine businesses, a footprint that underlines both the scale of unmet demand and the growing role of alternative lenders in the market. Filling a persistent gap in SME finance. Access to formal credit remains limited for Philippine small businesses. According to the International Finance Corporation, citing the Asian Development Bank SME Monitor 2023, SME credit penetration stood at 2.2 per cent of gross domestic product in 2023. That figure highlights a structural shortfall: banks and traditional lenders provide only a small share of the capital that SMEs need to grow and manage cash flow. Against that backdrop, non-bank financing platforms like First Circle have carved out a role by offering quicker, digital-first products tailored to the cash-flow cycles of small firms. The new facility from Cathay United Bank will bolster First Circle's balance sheet capacity, allowing it to scale lending without immediately diluting investor equity or tapping capital markets. Why a Taiwanese bank is backing a Philippine lender. Cathay United Bank opened its Manila branch in 2015 and has been gradually expanding corporate banking services across the Philippines. The credit facility with First Circle adds to its regional corporate activity and demonstrates a trend where established banks partner with fintech lenders to access underserved SME segments. For a traditional bank, a financing arrangement with a non-bank lender provides a way to gain exposure to higher-yielding SME customers without building new distribution channels. For First Circle, the partnership supplies an important low-cost source of funds amid rising customer demand. The transaction also signals growing cross-border interest in Southeast Asian SME finance from Taiwanese and other East Asian institutions seeking diversified regional opportunities. Product mix and the push into solar financing. First Circle's product set includes unsecured lines and conventional term loans, but the firm has also been expanding into solar financing for businesses. Solar projects, which often involve upfront capital expenditure followed by predictable energy savings, represent a growing loan category in Southeast Asia as companies pursue energy cost reductions and emissions cuts. Supporting solar loans requires patient capital and expertise in structuring asset-backed and cashflow-driven financing. The Cathay credit facility could be used to meet such demand, enabling First Circle to provide larger or longer-tenor loans that match the financing profile of renewable installations. Broader availability of such financing may accelerate corporate adoption of on-site solar, particularly among medium-sized enterprises that previously lacked affordable capital. Risk, regulation and the limits of growth. Non-bank lenders face distinct risks compared with regulated banks. Liquidity access, interest-rate sensitivity and credit underwriting discipline are critical as platforms scale. First Circle operates under the Philippines Securities and Exchange Commission's regulatory framework for financing companies, which imposes capital and reporting obligations but does not mirror banking-sector supervision. A reliance on credit facilities and wholesale funding exposes non-bank lenders to rollover and concentration risk. If funding conditions tighten, smaller financiers can be vulnerable to margin pressures and mismatches between asset tenors and funding sources. The new facility from Cathay United Bank reduces immediate funding strain but does not eliminate the need for diversified liquidity sources, robust underwriting and prudent risk management. Market implications and competitive dynamics. The Philippines is one of the region's more fragmented SME credit markets. Large domestic banks compete with microfinance institutions, government lending programmes, and a growing cohort of fintech platforms. For fintech lenders, success hinges on speed of underwriting, data-driven credit models and distribution partnerships. First Circle's loan book, about US$260 million extended to over 5,000 businesses,is significant by Philippine fintech standards but still small relative to banking-sector volumes. The firm's ability to convert this credit facility into sustainable growth depends on its credit performance, customer retention and product innovation. If it can keep default rates low while expanding higher-margin products such as solar financing, it could capture a larger share of the SME market. Bigger picture for regional capital flows. The transaction underscores how cross-border banking relationships are enabling capital flows into Southeast Asian non-bank lending ecosystems. Taiwanese, South Korean and Japanese banks have all shown interest in the region's growth, often through corporate networks or by financing local financial institutions. Such flows provide patient capital that can support longer-term lending, including infrastructure and renewables. However, the long-term stability of these arrangements will be tested by global macroeconomic shifts, such as interest-rate movements and changes in risk appetite. Fintechs that rely on external wholesale funding must continue to shore up core metrics (capital adequacy, loan performance and diversification) to remain attractive partners. What to watch next. For the Philippine SME market, the immediate question is whether increased funding can rapidly translate into better credit access and improved business outcomes. Policymakers and development finance institutions have argued for stronger credit reporting, collateral reform and targeted guarantee schemes to boost SME lending. Private-sector initiatives like First Circle's expansion can help in the short term, but structural reforms will be necessary to raise SME credit penetration materially above the current 2.2 per cent of GDP benchmark. Investors and market watchers should monitor First Circle's loan growth, asset-quality trends and the mix between working-capital, term loans and solar financing. For Cathay United Bank, the partnership will be a test case for similar cross-border collaborations: whether they deliver predictable returns and manageable credit risk in an economy where small firms remain the backbone but struggle to access formal finance. Editor, e27

Financing company First Circle has unveiled its new smart banking solutions for SMEs during its annual GrowthX event at the SEC headquarters in Makati City.