The Financing Paradox That AI Might Solve
Philippine MSMEs contribute approximately 40% of GDP and employ over 60% of the workforce, yet they receive less than 5% of total bank loans. The reasons are well-documented: many small enterprises lack formal financial statements, have limited collateral, and operate in informal channels that make traditional credit assessment difficult. Banks perceive them as high-risk; MSMEs perceive banks as inaccessible. The result is a persistent financing gap that constrains growth across the sector.
In July 2026, a partnership between the Department of Information and Communications Technology (DICT) and the Land Bank of the Philippines (LANDBANK) signaled a new approach to this old problem. The two agencies signed a Memorandum of Understanding (MOU) to jointly develop AI-enabled digital solutions that help MSMEs improve access to financing and accelerate digital transformation. The partnership forms part of the ASEAN Priority Economic Deliverable (PED) on AI-Powered MSME Growth, seeking to expand access to affordable AI tools for MSMEs across the region as the Philippines chairs the ASEAN Summit.
The MSME AI Tech Stack
At the center of the DICT-LANDBANK collaboration is the MSME AI Tech Stack — a mobile-first suite of AI assistants designed to address the most common challenges facing small businesses. According to DICT, the platform will help MSMEs with:
- Preparing bankable business plans — a critical requirement for loan applications that many small entrepreneurs struggle to produce
- Complying with government requirements — navigating the complex web of permits, registrations, and regulatory obligations
- Setting profitable prices — using data-driven insights rather than intuition alone
- Understanding contracts — reviewing terms and conditions that may contain unfavorable clauses
- Creating marketing content — developing promotional materials without hiring expensive agencies
- Identifying financing and government support programs — matching enterprises with relevant loan programs and assistance initiatives
Designed to be accessible in Filipino, English, and other Philippine major languages, the platform guides entrepreneurs through each process to enable small businesses to become investment-ready.
DICT Secretary Henry Aguda framed the initiative in terms of practical impact: “Artificial intelligence must create real opportunities for our people, especially our MSMEs that serve as the backbone of the economy. This partnership with LANDBANK reflects our commitment to harness emerging tech and improve access to financing.” Undersecretary Faye Condez-de Sagon, who has been shepherding the ASEAN PED and forging strategic partnerships, added: “Our ASEAN PED is about making AI useful for ordinary businesses. This MOU is another step which turns that vision into practical tools that will help MSMEs become more productive, financing-ready, and competitive.”
The LIFTING Program: From Preparedness to Financing
The AI tools do not operate in isolation. LANDBANK’s Innovative Financing Thrust Towards Inclusive National Growth (LIFTING) MSMEs Lending Program, launched in September 2025, provides the financing mechanism that AI-prepared enterprises can access. Under a separate MOU signed in May 2026, DOST-assisted enterprises gain enhanced access to LIFTING, enabling them to scale up operations, adopt new technologies, and generate employment in their communities.
The lending structure is tiered based on enterprise maturity: approved applicants may receive ₱500,000 for startups, ₱5 million for expanding MSMEs, and up to ₱50 million for those levelling up. DOST identifies and endorses eligible MSMEs and startups while providing technical assistance to improve their readiness for financing; LANDBANK evaluates loan applications, extends financing support, and manages loan accounts.
LANDBANK President and CEO Lynette V. Ortiz described the alignment: “Our country is rich in innovators—young, capable, and driven by purpose. By aligning DOST’s innovation ecosystem with LANDBANK’s development financing, we are accelerating commercialization, lowering barriers, and strengthening MSMEs as drivers of inclusive growth.”
Why AI Is a Structural Intervention, Not a Gimmick
The DICT-LANDBANK collaboration is not merely about deploying fashionable technology. It addresses a structural inefficiency in the Philippine financial system: the transaction cost of evaluating small loans relative to their size makes MSME lending unattractive to banks. By using AI to help MSMEs prepare standardized, bankable business plans and organize their documentary requirements, the platform reduces the information asymmetry that drives risk aversion.
The initiative also builds on existing momentum. As of June 2026, more than 94,351 MSMEs had accessed over ₱32.5 billion in loans through digital channels via the Small Business Corporation. The RISE UP Program alone has benefited 40,216 MSMEs with over ₱13.4 billion in financing, while the Women’s Enterprise Fund has supported 10,763 women-led enterprises with ₱2.7 billion. The AI Tech Stack aims to bring even more enterprises into this pipeline by addressing the preparation gap that prevents many viable businesses from applying for financing in the first place.
For a sari-sari store owner or a small food processor, the combination of AI-powered preparation tools and accessible financing represents a fundamental shift in what is possible. The barriers that once seemed insurmountable — the complexity of loan documentation, the opacity of regulatory requirements, the difficulty of demonstrating creditworthiness — are being systematically lowered by technology designed for their specific needs.