Guiller A.

Dosdos

MBA 298 – Business Research Models

Introduction

Small and medium enterprises (SMEs) have been accepted as the engine of economic growth and the
promoter of equitable development, (Christopher, I.F., 2007). Micro, small and medium enterprises
(MSMEs) have a very important role in developing the Philippine economy. They help reduce poverty by
creating jobs for the country’s growing labor force. They stimulate economic development in rural and
far-flung areas. (Philippine Senate, 2012). Given their dynamic and productive characteristics, small and
medium enterprises (SMEs) are seen as crucial for a country’s economic growth, employment creation
and innovation. Their lack of access to financing has often been cited as one of the major constraints
affecting their performance and competitiveness. Lack of access to financing implies that a substantial
number of SMEs cannot obtain financing from banks and other sources in order to start, innovate, grow
and develop their enterprises. In a recent PIDS-ERIA survey of barriers of 101 SMEs from the electronics,
automotive, garments, and food sectors; Aldaba et al (2010) indicated that financing constraints have
remained one of the most critical barriers affecting SME growth. Limited access to external financing is
part of the reason why SMEs use their own funds or borrow from friends or family as the prime source of
financing their business operations (Schoombee, A., 2000). Further, they often lack the necessary capital
to operate their business. Access to capital is critical to the development of small-scale enterprises.
(Leaman et al,1992). With the new government initiative to address this problem, the Department of
Trade and Industry (DTI) has rolled out PHP1.7 billion worth of loans to micro enterprises as of this month
under the Pondo sa Pagbabago at Pag-asenso (P3) Program. SB Corp. is DTI’s financing arm that facilitates
the P3 Program, wherein it does the retailing of government funding through conduits.

This study aims investigate the impacts of Government initiated microfinance facilities on MSMEs in Iligan
City. Specifically, the objective of the research is to determine the effects of microfinance through
government agencies in the business income of MSME’s in Iligan City.

Title: “Assessment of the financial impact of Government initiated Microfinance to MSMEs in Iligan
City”

Problem: Determine the effect of Government Initiated Microfinance on the Business Income and Asset
Size to MSME’s in Iligan City.

References:

1. Christopher, I.F., 2007. Impact of Microfinance on Small and Medium-Sized Enterprises in Nigeria
2. Aris, M., 2006. SMEs: Building Blocks for Economic Growth. Retrieved from http://
www.statistics.gov.my/ portal/ download_journals/files/ 2007/Volume1/Contents_sm es.pdf.
3. Leaman, S.H., T.J. Cook and L.S. Stewart, 1992. Rural Economic Development: Learning From
Success. Economic Development Review, 104(4): 27-33.