Starting a small business is a difficult task. Aside from profit, one of the most significant barriers that may make or break it is money—you must have adequate funds to establish or scale your business. And if you’re just starting out, you’ll have a lower chance of getting a business loan.
Banks, for example, have stricter rules, and most of the time they only give loans to businesses that have been around for a while.
But your options don’t end there, though. There are other, lesser-known loan providers in the country that are more flexible and lean toward small businesses or startups. They’re not as common as banks, but they’re not hard to find either!
If you’re trying to expand your small business and need financing, keep reading to learn more about business loans in the Philippines and where to find one that’s more suitable for your business.
Qualifications for business loans in the Philippines
First of all, loan providers in the Philippines can be categorized into three types: bank, non-bank, and government. While these providers cater to different markets, all of them require the following basic eligibility:
- Must be a Filipino citizen aged 21 to 65 when the business financing matures.
- Should have an SEC-registered or DTI-registered business with at least three years of profitable commercial operations.
- A minimum annual gross sales figure must be met.
- Good credit standing
Bank loans
These are the most common types of loans because they are given by commercial banks and are highly commercialized. However, they aren’t for everyone, especially for aspiring business owners who only have a business plan in hand. But if you have had a well-established business for more than a year with the legitimate paperwork to back it up, this loan provider is for you!
| Maximum loan amount | Can go up to ₱5 million depending on the bank. |
| Business tenure | Business operating for at least 1 year |
| Interest rates | 1.3% to 2% per month |
| Loan term | Up to 5 years |
| A secured or unsecured loan | Unsecured |
Pros of bank loans
- They are very common.
- The loan amount is usually high.
- Repayment can be up to 5 years.
- Interest rates are usually competitive.
Cons of bank loans
- Strict requirement.
- High-income requirements
- Not startup-friendly.
Private lending companies
These types of loan providers are less common in the mainstream market, but they are equally as accessible as banks. They’re not highly commercialized but their popularity is mostly fueled by word of mouth. These providers offer very flexible loan application requirements and processes, but the loan amount isn’t as big as those from banks.
| Maximum loan amount | Can go up to ₱1 million, however, only a few providers offer this much amount. Starting loan amount is also usually as low as ₱50,000 to ₱100,000. |
| Business tenure | Business operating for at least 1 year |
| Interest rates | 1.5% to 4% per month (quite big overall! |
| Loan term | Up to 1 year |
| Secured or unsecure loan | Unsecured |
Pros
- They have a local presence across the country.
- The application process is less stringent than banks.
- Good for small business owners and aspiring negosyante.
- The income requirement isn’t usually high.
Cons
- The loan term is usually up to 1 year only.
- Credit investigation (CI) can be a bit intrusive.
- Interest is usually higher than in banks.
- Various providers have had a bad record in payment collection.
List of private lending companies in the Philippines
- Southeast Asia Link
- Global Dominion Finance
- First Circle Finance
- Esquire
- Radiowealth Finance Company (RFC)
Government programs
While the government does not provide many business loans, when it does, they are usually very consumer-friendly. In fact, these loans are easy to apply for, and the approval rate is quite high given that you meet their criteria. Because most of the time, this type of loan is only offered to certain demographics and is offered through NGOs, government agencies like DTI and Go Negosyo, or local government units (LGUs).
| Maximum loan amount | can go up to ₱500,000. The starting loan amount is also usually as low as ₱20,000 to ₱50,000. |
| Business tenure | Your existing business must have been operating for a year upon application. But, there are programs that do not require an existing business to qualify. |
| Interest rates | No definite rate, some are even offered at a 0% interest rate |
| Loan term | Up to 3 years |
| Secured or unsecure loan | Unsecured |
Pros
- Low-interest rate.
- Requirements and eligibility aren’t difficult to meet.
- Interest rates are very competitive, especially those government aids that are extended in a form of business loans.
Cons
- They’re usually offered to certain demographics like the OFW reintegration program, which is only offered to OFWs, or the P3 program, which is only for businesses that were badly hit during the pandemic.
List of government business loans in the past
- Expanded P3 Programs For COVID-19
- COVID-19 Assistance to Restart Enterprises (CARES) Program
- HEROES program for repatriated OFWs
- MSME Credit Guarantee Program (MCGP)
- RISE UP Micro Multi-Purpose Loan
- RISE UP Multi-Purpose Loan for SME First-Time Borrowers
- RISE UP Multi-Purpose Suki Loan
- RISE UP Tindahan Loan
- RISE UP Turismo Loan
- Pondo sa Pagbabago at Pag-Asenso (P3) Program
You can also check with your local government for any business loan offers because every LGU has its own initiatives.
A business loan can be a golden ticket toward successfully starting your own business. Make sure you equip yourself with the right knowledge and tools to run your business smoothly, like a StoreHub POS!
As a business owner, your focus should be on things that create a bigger impact on your business, like marketing and driving more sales. With that said, paperwork and all those tedious little tasks should be the least of your concerns. A cloud-based POS like StoreHub works like your own business manager; it automates your sales report, inventory tracking, and staff management with little to no effort.
Book a free demo today to see how it can help you succeed!
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