Microfinance is one of the financial services that is incredibly significant in assisting majority of people during uncertain times. Many people in the business world long for help to bridge the difficulties they have experienced due to unemployment, business bankruptcy, additional capitalization, and financial resources. With this, Microfinance is considered one of the important types of financial services that could ease the need of the people affected by the problems in the business entities, as Microfinance has effective tools to reduce poverty (Agbola et al., 2017). Makara et al. (2024) asserted that microfinance alleviates poverty, encompassing social, economic, and political elements. It mainly focused on economic development with a primary objective to improve outreach to low-level sectors of the economy through financial inclusion consideration. The whole idea of microfinance began back in the mid-nineteenth century when Lysander Spooner understood the advantages of microfinance to farmers and entrepreneurs as a means in which the poor people could exit poverty and provide support to them (Das, 2022). Ideally, there was the existence of Microfinance (also called microcredit) in the middle of the 1800. It is also during the 1970s when Dr. Yunus, a Nobel Prize winning economist, introduced a new term of lending, observed poor people in a village named Jobra in Bangladesh and found out that these people could not improve their economic condition due to the lack of access to capital because of their lack of inclusion in the regular financial system. As a response, Grameen Bank was organized and operated with a vision to alleviate poverty, bridge the need for capital, and reach out to those people regarded as “Nonbankable'' (Malik, 2008; Pattnaik et al., 2024).  

Microfinance refers to the finance services extended to the low-income individuals or groups like Micro, Small, and Medium Enterprises (Kanga et al., 2024). Microfinance institutions aim to provide credit in the form of multi-purpose loans, agricultural loans, small business loans, and additional working capital, referred to as microloans or microcredit. Other than these services, microfinance institutions also offer insurance, money transfers and encourage savings to account for that regulated one (Pattnaik et al., 2024).  Accordingly, there were 1.7 billion adults recorded globally which are classified as financially excluded and living without formal credit or savings (Demirgüç-Kunt et al., 2020). Bangko Sentral ng Pilipinas (2001) regarded microfinance loans as “small loans granted to the poor and low-income families, as well as small business or the MSMEs which enabled them to provide their needs for capital, uplift the status of their income level and enhance their living standards”.

Microfinance Services 

The rural forest-reliant microenterprises require a wide range of financial services, including microcredit, savings, credit, leasing, insurance, and cash transfers, in addition to microcredit. Microfinance services must be handy, quick to obtain, and competitively priced to meet these objectives. Quaye et al. (2014), and Siwale and Godfroid, (2021) research showed that micro entrepreneurs who worked with microfinance institutions benefited from access to savings services, loan services, and training services, all of which contributed to the growth of their businesses. Microfinance institutions have enhanced access to credit and savings services for financially underserved individuals and micro, small, and medium-sized enterprises, (Davidsson, 2010; McKelvie and Wiklund, 2010; Tefera et al., 2013) found no evidence that the MSEs sector had grown or expanded. 

Savings

The availability of safe and flexible savings services supports low-income households in mitigating financial risks, smoothing income fluctuations, addressing unforeseen expenditures, and fostering long-term asset accumulation, as demonstrated by global microfinance experience (Kelikume, 2021; Osuma et al., 2025). Adequate savings services are particularly critical for extremely poor rural households, who often have limited investment opportunities and lack secure ways to store their funds (Karlan, 2014). This means that microfinance savings have been evaluated alongside other services to determine whether or not business owners are maximizing the use of savings, recognizing its importance, and making the most of savings. Savings have thus been beneficial in all of the ways and effects that business owners are measured (Mpaata et al., 2025). 

Microcredit

According to (Al-Maamari et al. 2022; Al-shami et al., 2021) microcredit refers to modest loans made to low-income individuals or businesses. Microcredit programs generally provide loans that are standardized, have short maturities, small principal amounts, fixed repayment schedules, and elevated interest rates. For these enterprises, access to capital is critical for ensuring operational continuity and supporting business expansion (Satpathy et al., 2025); nevertheless, the existence of the financing gap necessitates the use of microcredit to bridge the gap (Al-Maamari et al., 2025). For start-ups and growing businesses, the most significant challenge is securing funding (Carni et al., 2024; Lange et al., 2024). When it comes to increasing productivity through resource mobilization, SME viability and operational continuity are strongly influenced by the availability of structured financial services (Surya et al., 2021). Therefore, MFIs are viable alternatives for small businesses since they help mitigate risks, boost earnings and cash flow, provide safekeeping for surplus cash, and facilitate the generation of interest on savings deposits (Viswanath, 2018). It aids SMEs in growing and diversifying and in doing respectable business. One of the major contributing causes to SMEs' poor performance is a deficiency of financial resources (Rodrigues et al., 2021; Zayed et al., 2022).

Evidence indicates that microcredit positively influences MSEs in Yemen by improving profitability, promoting sales growth, and supporting employment growth (Al-Maamari et al., 2025) and is positively correlated with overall SME success (Sarfo et al., 2024). Thus, the growth of SMEs in Nigeria was positively correlated with the amount of credit they received from MFIs, but positively correlated but not statistically significant with the length of their loans (Olowe et al., 2013). They also found that SME growth was positively and significantly associated with loan quantity and loan duration, suggesting that a boost in both factors results in better SME performance. Rohman et al. (2021) stated that microfinance institutions (MFIs) commonly initiate financing services to a poor community and assist them in creating a variety of micro-entrepreneurial businesses in developing countries. Customers who fall into this category typically lack either a solid credit history or substantial collateral (Kanga et al., 2024).

Leasing

According to (Landry et al. 2013; Raoli, 2021) a lease is a contractual agreement between the owner of a productive asset (the lessor) and another party (the lessee), who is granted the right to use the asset for a specified period in exchange for a lease payment. This payment is typically calculated to cover the lessor's costs, including depreciation, interest on invested capital, insurance, administrative fees, and a profit margin. During the lease period, the lessee is generally responsible for all operating expenses, such as maintenance and repairs, while the leased asset is expected to generate sufficient income to cover the lease payments. Leasing can be classified into three main types. First, the financial or full-payment lease, where payments are spread over a longer duration and generally represent the full value of the asset. In this type, ownership of the asset gradually transfers to the lessee, who becomes the full owner at the end of the lease term. Second, the hire-purchase lease, which involves shorter payment periods and also typically covers the full value of the asset, with ownership transferred incrementally with each payment. Third, the operational lease, where ownership is not transferred and the arrangement functions similarly to renting. Additionally, there is the leaseback (or retro lease), in which the client sells the asset to the financial institution under a leaseback agreement. This agreement specifies the rental price and the terms under which the client may repurchase the asset, effectively allowing the client to access liquidity while retaining the option to regain ownership.

Micro-insurance

The micro-insurance, as defined by Platteau et al. (2017), is a form of risk management to the poor. Insurance secures individuals and organizations financial losses by spreading risks among a high number of people (Lan, 2022). The contract documents the extent of a possible loss that the insurer will recompense and the individual or business covered by the insurance policy pays a premium that is similar to the likelihood and the price of the risk (Dayour et al., 2020). Moreover, medical expenses on illness and injuries are also taken care of by health insurance; the saving accruals in annuities, endowment and life insurance is used to take care of retirement and eventual death occurrence; the crop insurance covers are taken to cater to poor yielding factors like natural calamity. Weaknesses Death, sickness, property loss or incapability are common antecedents in the demise of a bad entrepreneur enterprise. This is useful since the microinsurance product allows policyholders to use the funds they have invested in the product to were it against calamities and resume operations in their businesses.

Remittances or Cash Transfers

Migrant remittances are a substantial source of income for households in many impoverished places (Mehedintu et al., 2019). Money transfers from seasonal and long-term migrants returning to their home countries are a very valuable financial service that can build up to a considerable volume and number of transactions. However, in-country transfers of finances are critical, particularly for rural families living in poorer areas who are often supported by a family member who works in the city. Cash-transfer programs have become more popular in many developing countries over the past 20 years (Dwyer et al., 2022; Yuliani & Nasrudin, 2024). These programs were important for reducing poverty and providing social protection (Al Izzati et al., 2023). When comparing the cost of cash transfers to the delivery of goods or services to local markets by assistance agencies, the former comes out on top. Guidelines also take into account the potential impact cash transfers may have on markets and individuals' resilience (Premand & Stoeffler, 2022).

Advantages and Disadvantages of Microfinance

Microfinance has some benefits and drawbacks that must be taken into account when creating profitable and effective programs. Some of the benefits include collateral-free loans (Gul et al., 2017), speedy loan disbursement, a large lending portfolio, and self-sufficiency and entrepreneurship (Gebremariam, 2010). According to reports, microfinance organizations do not require collateral when offering financial credit, and borrowers can acquire a loan immediately to address a financial emergency (Abrar et al., 2023). It also disburses housing loans and working capital loans with fewer formalities, allowing an individual to start a thriving business that requires little capital and generates a steady return, boosting self-sufficiency and entrepreneurship. Microfinance, on the other hand, has a number of drawbacks, including a strict repayment procedure, a small loan amount, and a high interest rate (Ghosh et al., 2020; Lakew & Birbirsa, 2018). In the absence of proper regulatory oversight, microfinance institutions often implement rigid repayment practices, which can compel clients to meet repayment obligations (Enimu et al., 2017; Pasha & Negese, 2014). Microfinance companies, unlike banks and other financial organizations, make tiny loans with high interest rates. Several investigations have demonstrated that microfinance institutions' services significantly improve the profitability of micro and small-scale businesses, helping those businesses grow, acquire new assets, and ultimately increase their revenues (Banerjee et al., 2015; Postelnicu & Hermes, 2018). The majority of these studies have concentrated on the effects of microfinance on the well-being of its clients, including its effect on alleviating poverty, improving economic status, and having socioeconomic impacts like empowering women in society (Agbola et al., 2017; Khursheed, 2022; Sulemana et al., 2023). However, the results of these previous studies have not demonstrated the efficiency with which micro and small-scale businesses utilize the loans and other services provided by microfinance institutions. Given the existence of innumerable microfinance institutions in the neighborhood, it is imperative to have an overall impact analysis across all of the debtors of the various microfinance institutions.

Research Questions

The study aimed to determine the level of availments through performance on the microfinance's services by MSMEs in Metro Manila. Purposely, the researcher sought to answer the following questions:

1. What is the demographic profile of the enterprises in terms of:

1.1. Years in operation

1.2. Type of industry

1.3. Type of business

1.4. No. of years as a member of any microfinance institutions

1.5. Estimated monthly income

1.6. No. of personnel

1.7. Asset size

1.8. Sources of funds

2. What is the level of availment through performance on the microfinance's services as utilized by the enterprises in terms of:

2.1. savings

2.2. credit

2.3. leasing

2.4. insurance

2.5 cash transfers

3. Is there significant difference on the assessment of the enterprises of the study on the level of microfinancing services availments while using these services in terms of the aforementioned variables?

4. Is there significant relationship between the level of availments of microfinance services utilized by the enterprises when grouped according to their profile? 

5. What are the challenges encountered by the enterprises while using the cited microfinance services in the operation of their businesses?

Research Design

The study applied a quantitative research design employing an explanatory sequential design method of data collection in which the owners, operators or authorized representative of enterprises provided insights and perceptions about their availments of microfinancing services and its significance on its operation, most especially, during uncertain times. As mentioned by Slater and Hasson, (2024) a quantitative approach involves using numerical data and structured methods to investigate research questions, based on the idea that relationships between variables can be measured. Surveys are particularly suitable in this approach when the objective is to examine how variables are related in particular real-life contexts (De Vaus, 2013; Roszkowska, 2025).

Respondents of the Study

A total of five hundred (500) enterprises were randomly participated on this study which validly represented MSMEs in Metro Manila using the G*Power Analysis. Sixty (60) of which answered the questionnaire on a face to face set-up while the remaining four hundred fifty (450) enterprises submitted their responses through Google Forms. With 0.05 significance level (α) and power of 0.98, a total sample population of 500 MSMEs owners/operators/ representatives were calculated broken down as 67 microenterprise owners/operators/ representatives with effect size (d) of 0.50, 405 small enterprise owners/ operators/representatives at d= 0.20, and 28 medium enterprise owners/operators/representatives at d= 0.80.

Research Instrument

The gathering and collecting of data were in the form of printed and online survey questionnaires. The online survey was through the Google forms, wherein a google link was given to the participants either by Facebook messenger group chat, email, and/or other social media platforms. The purpose of utilizing the online survey was to ease the retrieval of survey questionnaires (Regmi et al., 2016). The printed survey questionnaire was disseminated personally and directly to the enterprises. The questionnaire comprised four parts: Part I included informed consent and confidentiality agreement; Part II gathered demographic information such as years in operation, industry and business type, membership in microfinance institutions, monthly income, personnel, asset size, and sources of funds to classify MSMEs and assess financial components; Part III measured the level of availment of microfinance services - savings, credit, leasing, insurance, and cash transfers using a five-point Likert scale; and Part IV identified challenges encountered by enterprises in utilizing these services, providing a basis for strategies to optimize microfinance support for MSMEs in Metro Manila.

Validity of the Instrument

Content validity relates to how accurately an assessment or measuring tool taps into numerous features of the specific construct in question (Dixon & Johnston, 2019). In this study, there were three professionals/experts in the fields of accountancy, business, finance and/or management who conducted questionnaire validation test. The researcher presented the self-made questions to these experts for their evaluation and accumulated their valid judgments on its content. All of the validators' suggestions have been properly effected on to the questionnaire before being issued for the actual survey.

Data Reliability Analysis

Internal consistency and reliability of the items were measured through Cronbach's alpha (Taber, 2018; Tavakol & Dennick, 2011). The pilot test was done for 30 enterprises which were purposely selected. The tests resulted to a reliability index of 0.852 for 60 items which indicates a high acceptable level of instrument's reliability. Furthermore, the pilot test was done to enterprises other than the sample population which was also located in Metro Manila.

Ethical Consideration

Before the acceptance of involvement into the research study, participants were given a consent letter which was part of the survey instrument. The ethical components required for the research questionnaire were properly considered. This is evidenced by an approval from the Ethical Review Committee. Some highlights of the approved ethical considerations were related to: (1) major ethical difficulties in the research study, (2) the right to autonomy of enterprises through informed consent, (3) criteria and procedures for inclusion of research participants, (4) description of the process that the researcher used to obtain valid consent, (5) confidentiality clause, (6) retention, storage, access and disposal of the data gathered, (7) the rights and compensation of the participants and among others. The management of private information and the secrecy of responses were ensured and that enterprises' professional responses for the company they represent were not in any way defined their personal overall value, behavior, and attitude. The anonymity, privacy, and secrecy of the enterprises' identities and responses were of prime importance to the study.

Table 1: Demographic Profile of the Enterprises.

Table 1 presents the frequency distribution of the enterprises in terms of industry type, business type, years of operation, membership, number of personnel, source of funds, asset size, and monthly income. Most respondents were small enterprise owners (405; 81.0%). In terms of business organization, the majority were corporations (237; 47.4%), followed by general professional partnerships (111; 22.2%) and sole proprietorships (94; 18.8%). Most enterprises employed 31–40 (201) or 41–50 (198) personnel, confirming that the respondents largely belonged to the small enterprise category. Most enterprises had been operating for 6–10 years (357; 71.4%) and had been members of microfinance institutions for 4–7 years (390), indicating sustained exposure to micro-finance services.

The primary source of funds was microfinancing (397), suggesting that enterprises relied heavily on these financial services. In terms of asset size, 407 enterprises (81.4%) reported assets between ₱3 million and ₱15 million, while the majority also earned a monthly income of ₱20,001–₱50,000 (291; 58.2%), further confirming their classification as small enterprises. The findings indicate that enterprise demographic characteristics are associated with the level of microfinance service utilization. These results imply that variations in enterprise profiles influence the extent of microfinance availments and the intensity of financial service use (Navin & Sinha, 2021).

Table 2: Level of Microfinance Service Utilization of Enterprises in Terms of Savings.

Based on the results in Table 2, all savings-related indicators were rated as highly performed by the enterprises, with a composite mean of 4.49. The three highest-rated indicators were strict adherence to savings allocation (M = 4.84), encouragement to save in regulated institutions (M = 4.65), and the implementation of micro-savings programs to attract clients and savers (M = 4.64). These findings indicate that savings remains a strongly utilized microfinance service among enterprises, even amid uncertain economic conditions, thereby strengthening financial stability and reducing operational risks. Mishra et al. (2024) and Prina, (2015) emphasized that access to effective savings services helps individuals manage income fluctuations, address emergencies, and gradually build assets.

Table 3: Level of Microfinance Service Utilization of Enterprises in Terms of Credit.

Based on the results in Table 3, all credit-related indicators were rated as highly performed by the enterprises, with a composite mean of 4.44. The three highest-rated indicators were credit encouraged for individuals without access to regular banking services (M = 4.57), credit extended to rural poor and small and medium enterprises (M = 4.55), and the provision of standardized loan products with short maturities, limited quantities, and fixed repayment schedules at higher interest rates (M = 4.52). These findings indicate that credit remains a strongly utilized financial service among enterprises, enabling them to support MSMEs' operations and growth, particularly during uncertain times. These results align with previous studies emphasizing that microcredit addresses the financing gap faced by MSMEs, providing a steady inflow of funds essential for efficient operation and expansion (Al-shami et al., 2021; Sainz-Fernandez et al., 2018). Microfinance institutions further enhance financial performance by offering additional funding to clients often lacking established credit history or collateral (Baklouti, 2013; Hartungi, 2007; Quayes, 2012).

Table 4: Level of Microfinance Service Utilization of Enterprises in Terms of Leasing.

As shown in Table 4, all leasing-related indicators were rated as highly performed by the enterprises, with a composite mean ranging from 4.59 to 4.63. The three highest-rated indicators were microfinance institutions extending leasing services to small and medium enterprises (M = 4.63), implementing leasing programs to attract clients and savers (M = 4.62), and offering advanced leasing products and services to enjoy tax benefits (M = 4.59). These findings indicate that leasing remains a widely utilized financial service among enterprises, helping MSMEs access resources and funding without the need for collateral.  

Table 5: Level of Microfinance Service Utilization of Enterprises in Terms of Insurance.

Leasing reduces or eliminates collateral requirements because the leased asset itself serves as security, with tax savings from fiscal depreciation as an additional benefit (Michiels et al., 2021). Thus, leasing provides a relatively safe market for financial institutions (Michiels et al., 2021; Zhu et al., 2022); while addressing SMEs' unique needs, including limited access to bank financing, and reliance on a few key resources (Oke, 2020). Effective leasing products for MSMEs are simple to apply for, easier to secure than traditional loans, and tailored to their actual and projected income-generating capacity.

Based on the results in Table 5, all insurance-related indicators were rated as highly performed by the enterprises. The three highest-rated indicators were engaging in insurance to protect company assets (M = 4.62), encouraging insurance on products and services rendered (M = 4.58), and utilizing all types of insurance to safeguard assets (M = 4.57). These findings indicate that enterprises effectively utilize insurance as a financial service to protect MSMEs' assets, investments, and mitigate potential financial losses. The role of insurance aligns with previous studies highlighting its importance in risk manage-ment. Micro-insurance allows businesses to distribute financial risks across multiple companies, helping them recover from uncertainties and maintain operations (Karagyozova, 2023). Additionally, product liability insurance offers businesses protection from claims involving bodily injury or property damage arising from product use. Numerous studies support the finding that insurance is a critical financial tool for safeguarding MSMEs' resources and ensuring business continuity (Mohammed et al., 2019; Ramiya & Suresh, 2021; Satpathy et al., 2025).

Table 6: Level of Microfinance Service Utilization of Enterprises in Terms of Cash Transfers.

Based on the results in Table 6, all cash transfer-related indicators were rated as highly performed by the enterprises. The three highest-rated indicators were MFIs carrying out money transfers to supplement MSMEs' needs (M = 4.64), frequent cash transfers through microfinance institutions (M = 4.58), and MSME business owners engaging in cash transfers during operations (M = 4.58). These findings indicate that enterprises effectively utilize cash transfers as a financial tool, enabling timely support for MSMEs, particularly during uncertain situations, while reducing the cost and inefficiencies of physical money transfers. The importance of cash transfers is supported by reports from the Bangko Sentral ng Pilipinas (BSP, 2022), which highlighted the country's pioneering role in digital payments and the significant uptake of digital cash transfer methods among MSMEs for business transactions, payroll, remittances, and other financial obligations. Digital cash transfers reduce transaction costs and financial losses compared to physical remittances (Zhao & Feng, 2022).

 

Table 7: Significant Differences in the Level of Microfinance Service Availment.

Table 7 presents the results on significant differences in the enterprises' assessment of the level of performance through the availment of microfinance financial services across variables. Using one-way ANOVA, the results revealed significant differences in savings, leasing, insurance, and cash transfers when grouped according to industry type. A comparison of mean performance levels of these financial tools across industries was conducted to determine whether business owners hold different perspectives toward these services, which they have utilized over time.

The analysis showed significant differences among the four financial tools: savings (F = 13.31, p = .000), leasing (F = 5.33, p = .005), insurance (F = 10.92, p = .000), and cash transfers (F = 6.30, p = .002). This implies that business owners' engagement in these financial activities varies according to industry type, with larger companies generally conducting more transactions daily. In contrast, there was no significant difference observed for credit (F = 2.04, p = .131), indicating that the use of credit is relatively consistent across industries. This suggests that the decision to avail of credit is more dependent on the individual business owner's capacity and interest rather than the industry classification.

 

Table 8: Pearson Correlation Coefficient between the Level of Availment of Microfinance Services and Demographic Profile.

Table 8 presents the Pearson correlation coefficients between the level of availment of microfinance services and the enterprises' demographic profile. The table showed that there was a significant relationship at the 0.01 level between the level of performance of some microfinance financial tools and services indi-cators and certain demographic profile determinants. Specifically, industry type was significantly and weakly correlated with leasing (r = .117, p = .009); business type was significantly and weakly to moderate correlated with credit (r = .171, p = .000), leasing (r = .198, p = .000), insurance (r = .203, p = .000), and cash transfers (r = .208, p = .000); years of operation was significantly and weakly correlated with insurance (r = .115, p = .010); and membership in MFIs was significantly and weakly correlated with insurance (r = .154, p = .001). These findings indicate that some microfinance financial tools and services are affected by changes in the demographic profile.

At the 0.05 significance level, other notable weak correlations were observed: industry type and insurance (r = .097, p = .031); business type and savings (r = .111, p = .013); membership in MFIs and credit (r = .095, p = .033) and cash transfers (r = .102, p = .022); number of personnel and savings (r = .100, p = .025); and source of funds and savings (r = -.100, p = .026). This implies that certain financial tools and services have modest associations with demographic characteristics, suggesting that the level of perfor-mance may partly depend on the demographic profile of the enterprise. Furthermore, some relationships with monthly income were moderate to strong and negative: savings (r = -.421, p = .000), credit (r = -.499, p = .000), leasing (r = -.407, p = .000), insurance (r = -.419, p = .000), and cash transfers (r = -.513, p = .000), indicating that higher monthly income is associated with lower perceived need or utilization of these microfinance services.

Table 9: Challenges Encountered in the Use of Microfinance Services.

The research findings revealed that enterprises highly performed in utilizing microfinance financial services such as savings, credit, leasing, insurance, and cash transfers. The results indicate a positive and strong engagement of enterprises in savings, credit, and leasing services, particularly in promoting financial stability, supporting operations, and enabling access to resources without collateral. There exists a weak to moderate correlation between enterprise demographic profiles and the utilization of microfinance services, where factors such as business type, MFI membership, and years of operation influence financial service performance. Higher monthly income of enterprises was negatively correlated with the use of microfinance services, suggesting that enterprises with greater financial capacity rely less on these tools. Significant differences were observed in savings, leasing, insurance, and cash transfers across industry types, whereas credit use remained consistent regardless of industry, implying that credit engagement is driven by individual enterprise needs. The top challenges encountered by enterprises included high credit obligations relative to savings, poor budgeting, and difficulties in debt repayment, highlighting areas for improved financial planning. These findings are aligned with prior studies emphasizing that micro-finance services help MSMEs manage liquidity, mitigate risks, and enhance profitability. Practically, this suggests that MFIs should continue promoting accessible and diversified financial products tailored to the unique needs of small enterprises. Moreover, enterprises are encouraged to develop better budgeting and repayment strategies to maximize the benefits of microfinance engagement. Future research may consider exploring additional financial tools and alternative enterprise demographics to assess their influence on the utilization and impact of microfinance services.

The University's Ethics Committee reviewed and approved all procedures for this study.

The researcher would like to express sincere gratitude to the participating MSMEs in Metro Manila, as well as to the experts and professionals who provided valuable insights during the validation of the research instrument.

The author declares no conflict of interest in the conduct and publication of this study.