[Finterest] Arq’s SheSecure program gives better funding for women-led SMEs

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Backed by the Australian government, the private debt program aims to close the funding gap for growing women-led businesses, offering loans of up to P30 million

MANILA, Philippines – Women lead the majority of micro, small, and medium enterprises (MSMEs) in the Philippines, yet when it comes to scaling up, they often face greater challenges in securing funding.

This is where SheSecure comes in.

SheSecure is a new private debt program launched by Arq SME BDC (Arq), a local investment firm, with funding from the Australian government’s Investing in Women initiative. The program provides affordable, flexible financing to women-owned and women-led businesses, targeting enterprises with P35 million to P100 million in assets — the range where women entrepreneurs typically begin to lose ground in ownership.

“We are providing smart capital to bridge that missing financing gap for SMEs here in the country,” Abigail Tan, co-founder and managing partner of Arq, said in a March 4 interview on ABS-CBN News Channel’s Market Edge. “In the Philippines, while there is a growing number of women investors in the country, the reality is it’s still dominated by men.”

While businesses with assets below P15 million are mostly women-owned, that figure drops sharply to just 16% ownership when businesses grow past P100 million, according to Tan. One reason could be that many women entrepreneurs struggle to access financing, limiting their ability to expand beyond the micro level.

Arq’s SheSecure could change that for women entrepreneurs who lead fast-growing businesses. Unlike venture capital firms that focus on early-stage startups, Arq invests in growth-phase businesses that can demonstrate cash flow and repayment capacity.

Qualified businesses can borrow between P10 million and P30 million, with flexible repayment terms ranging from six to 24 months at an interest rate as low as 1% per month — far lower than the market standard of 3% to 5% per month for non-bank financial institutions. Both collateralized and non-collateralized options are available, giving more women entrepreneurs access to funding without the stringent asset requirements of traditional lenders.

While the program mainly operates in the private debt space, SheSecure’s loans can also include equity-like features, such as warrants and convertible financing, allowing businesses to raise capital without giving up full ownership.

SheSecure is also not just about financing. The program also provides women entrepreneurs with gender equality training, mentorship, and business development resources.

So far, SheSecure has invested in three businesses, with a goal of funding 20 in the coming months. That means the investment firm is looking for at least 17 more potential women-led businesses to partner up with.

Closing the gender gap in SME financing

Despite making up the majority of MSME owners, women-led businesses in the Philippines face significant barriers in accessing funding. A 2020 Asian Development Bank study found that 58% of women MSME owners struggled with access to finance, compared to just 37% of men-owned businesses. Many women entrepreneurs hesitate to apply for funding due to the complexity of application processes, documentation requirements, and high costs.

Another issue is that women entrepreneurs tend to rely on personal accounts rather than business or merchant accounts, which can limit their access to financial services. Only 17% of women-owned MSMEs use business banking, compared to 39% of male-owned businesses. This means many women-led enterprises don’t build the financial track records that banks and investors look for when assessing creditworthiness.

Arq hopes to help close this gap through private debt financing. Unlike traditional bank loans, private debt offers more flexible terms and can be tailored for growth-stage businesses, which are those that have already demonstrated strong cash flows but need more funding to scale up.

“We’re able to further demonstrate that there is indeed a portfolio diversification benefit when you invest into, I would say, gender-equal organizations — having more women-owned and women-led businesses,” Tan said in the interview.

For women entrepreneurs looking to access funding, Tan also shared three key tips:

Prepare your financials. Keep financial records and growth plans for at least one year, which can dramatically improve your chances of getting funding. Investors want to see that your business is financially organized and scalable.
Build relationships early. Don’t wait until you need funding to engage with investors. Developing connections with lenders and financial institutions ahead of time makes the process smoother when you’re ready to raise capital.
Find smart capital. Choose investors who can offer strategic value, such as mentorship and network connections, rather than just financial support.

For those interested, SheSecure is currently accepting applications from businesses that are at least 50% women-owned or have at least 30% women in senior management or board positions. Companies must also meet specific size and financial requirements, such as having P35 million to P100 million in assets or P50 million in revenue. – Rappler.com