Business Loan for SME’s in the Philippines

Are you one of the dreamers who finally decided to do something with their life and boldly turned a business concept into reality? You have the finished the details of how the business will go, the location, the design, or you might have already perfected a  new recipe for smoothies, you have already prepared for all the necessary tools needed to set up the business but the only problem is that you still lack funding?

Despite coming up with numerous solutions, you have already maxed out your possibilities of acquiring more funding through your own means, despite being creative and coming up with all the action plans, the looming problem is staring at you in the face. You still lack the necessary funding to help your business improve.

While you can still borrow from friends and family you figured that would be too risky, not to mention emotionally draining so you would rather find a logical solution to the problem instead- and that is through a legitimate business loan, only that you haven’t really figured out yet which one is trustworthy- which bank offers the best solution and what type of business loan lender will help you meet your short term as well as long term goals.

We have come up with a list of potential solutions for you in this article. The business loans provider that we listed in here, can meet the unique needs of Pinoys when it comes to funding. Business loan lenders need to be flexible when it comes to meeting the needs of Pinoy Entrepreneurs. After all, the nature of most businesses in the Philippines is unique and for it to last it should be easy to understand, work with and adaptable to the daily needs of Pinoys.

The recent economic developments in the Philippines and the improved financial standing of the Philippines has eased a lot of laws and restrictions from banks and lending institutions. Getting a business loan for small businesses or small-to-medium enterprises is no longer impossible. SME’s are given various options when it comes to business loans. Banks are much more confident with the returns and adjusted their business loan options according to the needs of Pinoy entrepreneurs.

There are different kinds of SME’s from your basic sari-sari store, online shop, Pisonet business, to home cooked meal delivery, accessories and small food kiosks. Whatever the business is you can already find lenders that offer simple terms.

Just remember that you need to have a concrete plan before getting certain loans.  Loans are for people who already have a plan of action in mind and are just waiting to get it into motion. Lenders may it be banks or investors would take the time to see your future action plans be it short term or long term. The first thing you need to do is to know a concrete number of loanable amounts in mind and from there you can narrow down your search and find a secure business loan that will work for you.

  1. Credit Line for Short-term Business Loans

This is one of the quickest ways to gain funding in the Philippines. It gives you financial control because the interest will only start accumulating once you start using the credit line and you are only asked to pay for the interested. It is one of the most ideal kinds of the short-term business loan or working capital and you can use this for purchasing additional items to meet your inventory demands.  Banks in the Philippines usually offer SME’s 500,000 PHP to PHP 20 million depending on the credibility of your status. BDO SME Ready check, for example, offers one of the most enticing kinds of business loan. If approved you can loan a total of 3 million up to 20 million, with a 1-year option to renew and a 7.5% interest rate. The good thing about this type of loan is that you will be given flexible monthly amortizations. Other banks like BPI, Metrobank, and PSBank are also giving options for SME’s and start-ups with varying interest rates and terms.

Banks usually issue or encash checks and some like BPI family give the ability to do ATM withdrawals making the process convenient, even including online transactions. The payment terms are also flexible compared with other kinds of loan, you can do so in monthly installments and as a borrow, you can repay the principal anytime you can do so within the loan term.

For you to have no issues with these kinds of business loan is to ensure that your business has a good reputation in the community. There are some banks that investigate the reputation of lenders, make sure to establish a credible business image as this could greatly affect your ability to get approved.

  • Secured Business Loan

However, if by any chance you are hoping to borrow more, the next best option for you when it comes to business loans in the Philippines is to go apply for a secured loan. Secured loans are for businesses who can offer collateral. If you have real estate properties and bank deposits that could over the losses just in case, you are not able to pay at the assigned date- you can offer collateral instead.

This type of loan will reduce the risk for you as a lender and most of the time this is the kind of loans that banks in the Philippines prefer. Banks offer lower interest rates and longer loan terms for people who offer collateral. It could be in the form of a real estate property, commercial property or even a car. This is ideal for Pinoy SME’s who are just starting, usually the ones who are just in their first or third year of operation.

Banks in the Philippines offer different types of secured business loans. They have tailored it to the needs of SME’s and usually call them as SME loans or Negosyo Loans. Today Pinoys are also given access to what they call as OWWA Loan for OFW’s.

Lenders have the option of charging collateral-related fees, including late payment penalties, as well as appraisal fee and collateral registration fee.

However, there are instances wherein some are unable to get approved due to strict policies of Philippine banks and secured financial institutions. This is where unsecured business loans come in. There are thousands of loan providers that have cropped up in the Philippines because of this. Most unsecured loans give Pinoy SME’s the chance to borrow 5,000 to 20,000 in just one day, but with higher interest rates. Some lenders have come up with their own terms and conditions and require identification from Pinoys who want to borrow. This could come in the form of OFW loans, Seaman’s Loan, Doctor’s Loan, Teacher’s Loan, Employee Loans and Emergency loans.  If you have a bad credit history or no credit history and you don’t have any kind of collateral to offer you have to take your chances with these lending institutions in the form of private lenders.

Before securing loans with private lenders, you must read the terms and conditions and assess the effect of your loan in your total financial and business standing. You should also transact with credible loan agents only to avoid anomalies. When it comes to business loans in the Philippines- getting informed and researching is important. 

Be wary of just about every business loan you see being offered on social media. Before giving your company information and important documents, take the time to learn more about the company you are dealing with to avoid difficulties in the future.

There are reputable private lenders that are trusted throughout the years. By reaching them, you have the chance to grow and improve your business – just have a proper strategy in mind.

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