Cathay United Bank partners with First Circle on SME financing

By Parth Prabhudesai

Philippine SME financing platform First Circle has secured a $4.87 million credit facility from Taiwan-based Cathay United Bank to expand lending for small and midsize enterprises (SMEs).

The agreement marks First Circle’s first partnership with a Taiwanese bank and comes amid growing demand for working-capital loans, business financing and solar financing solutions in the Philippines.

First Circle, a Securities and Exchange Commission-regulated financing company, provides unsecured online credit lines and loans of up to 20 million pesos to SMEs. The company said it has extended around $260 million in loans to more than 5,000 businesses since its launch.

The new facility is expected to strengthen the lender’s funding capacity and support the expansion of its digital-first financing products for underserved SMEs.

The deal also reflects increasing collaboration between traditional banks and FinTech lenders in Southeast Asia, particularly in segments where access to formal credit remains limited. According to the International Finance Corporation, SME credit penetration in the Philippines stood at 2.2% of GDP in 2023, highlighting a significant financing gap for small businesses.

Cathay United Bank, which opened its Manila branch in 2015, has been expanding its corporate banking presence in the Philippines. The partnership with First Circle gives the bank exposure to the country’s growing SME lending market through an established non-bank platform.

First Circle has also been expanding into solar financing, a segment gaining traction as businesses invest in renewable energy projects to lower costs and reduce emissions. The new funding facility could help the company support larger and longer-term solar-related loans.

The transaction highlights rising cross-border interest from East Asian financial institutions in Southeast Asia’s SME and FinTech lending ecosystem.