- Business loans are important for the economy so that entrepreneurs who have great ideas can start businesses.
- You can get a business loan from a bank or through a government program.
- We have listed the basic requirements for a borrower.
- Digido does not offer business loans, but you can still borrow money and spend it for any purpose, such as growing your business.
Small Business Loan in the Philippines
A business loan is money that you borrow from an institution for commercial purposes. (1) In many cases, business owners borrow to add funds for their newly established business or deals that they are about to put up.
There are many types of small start-up loans, not all of them come in the form of direct financing. In the Philippines, the most common source of the loans is banks. However, this is not the only source of loan. There are many others, which we will discuss today. These loans, like other types, have an interest. The interest rate varies between banks and the amount of your loan.
Today, you will learn about the different types of cash loans for the business, where to get them, and how much interest you can expect. By the end of this tutorial for startup loans in the Philippines, you will be able to make an informed decision about borrowing money for your deal. Check out each of our recommendations and then list down the different requirements, loan maximum, and interest rates. This should help you in deciding the best loan type for working capital and where to get it.
Can I Take a Business Loan at Digido?
Digido is an online fast lending company that offers quick cash for your business needs to those who need it. Right now, it does not offer online startup loans in the Philippines. However, this does not mean that you cannot borrow money from this company. You can still borrow money.
The thing with Digido is that it offers loans no matter why you need it. However, you can only borrow small amounts, like between ₱1,000 and ₱25,000. This loan has to be paid soon, including the interest. You can use this money to pay for goods, materials, utilities, and so much more.
To be able to get a online loan for working capital from Digido, you have to be a Filipino citizen, between 21 and 70 years of age. You should also be employed or have business, and provide documents proving your residence, age, citizenship, and your capacity to pay. You can do this by scanning and sending documents like credit card statement certificate of employment, income tax returns, and government ID.
Once you have supplied all of this, the company can take as little as 24 hours to approve or deny your application. Everything is online so you do not have to queue for the application process.
Types of Business Loans
There are different types of cash loans for the business, and you have to choose the best one that will help you grow your company.
A term loan is that you pay over the long term. Usually, this is the loan that you can pay for 12, 24, or 36 months. It is a little difficult to get approved for a term loan because of the size of what you are going to borrow.
You can get a term loan from a bank. The most common minimum requirement is at least ₱100,000. Term loans also have high interest rates.
A credit line is a loan where you receive a credit card. You can use this credit card for buying materials for your company. It functions as a credit card, but this is a kind of card that really has a high credit limit.
This credit line also has a huge interest rate, and you have to pay what you owe by the time it is due. If you fail to do so, you will pay several types of fees. On some occasions, a credit line is not a card, but rather a fixed arrangement between banks and businesses. For example, you may have a credit line in a gasoline station to put petrol in your fleet of trucks. The gasoline station charges the bank for your petrol use, and then you pay the bank.
Secured Business Loans
A secured loan is like a term loan. However, you need to give the bank a collateral. It means that the amount of what you borrow is only equal to the price of your asset.
A collateral can be a car, a lot, a house, or anything that has financial value. You can use your sticks and bonds as collateral if you want. With this type, the bank will seize your asset if you fail to pay your working capital small loan.
Unsecured Business Loans
This is a quick loan in the Philippines without any collateral. It is like a term loan, but you do not have to risk your asset. Most of the time, unsecured business credits are small, not more than a million pesos or so. Unsecured credits can be paid monthly, and you will also pay interest.
Where Can I Get a Business Loan?
There are two main methods you can try if you need a money to get a startup in the Philippines. These are banks and government business credit.
Banks – you need to be employed or your business should already be established. In some cases, banks will approve your credit provided that you already own at least 20% of your target capital. With banks, you will have to choose your payment terms, and you need to pay interest. The average interest rate is 15% per year.
Government loans – you can get the loan in the Philippines from the government. One government department where you can borrow money is the Department of Trade and Industry or DTI. (2) Such loans are regulated by the Bangko Sentral ng Pilipinas.
Annually, DTI sets aside a budget of ₱1 billion or more for loans. These are given to micro businesses only. The owner of the company may issue a business capital small loan. It means that the asset amount must be less than ₱3 million. The interest is only 0.5%. To be able to apply for this loan, your startup must have already existed for at least one year by the time of your application.Apply now
Why do You need a your Business Loan?
What are the reasons for getting a online loan in the Philippines? Why not just save money and then start your company once you have the capital?
The main purpose of getting a money is time. It is better to start a your business loan now when the prices of goods are still low. Here are the other reasons why entrepreneurs need a small capital loan in the Philippines:
- To expand the business – if your company is earning, it is going to take some time to be able to save money to build a new branch. Businesspeople who are confident of their performance need a business credit so they can establish a new branch. It is in this case small commercial capital loan will help you. If this happens, they can earn more money, and then pay their loans faster.
- To improve cash flow – some companyes are strapped for cash, especially those whose success is seasonal. For example, crop and animal farmers do not earn a lot of money the whole year. They need to add cash to their business while waiting for the crops or animals to grow. Then, they can pay for the loan once they have sold their products.
- To invest in better marketing strategies – some firms need to invest in advertising. If they do not have enough funds to do this, they need money. For example, you need money to pay graphic artists and social media experts. In this regard, you need to borrow from banks and other business institutions, so you have enough budget for your marketing.
- To prepare your start-up for a large wholesale order. For example, the holidays are coming, and you need to buy 3 times more products for holiday dishes to sell them in a profitable way. You can also use a fast cash loans for small business for this purpose, and then pay it off when you make a profit.
- To finance daily commercial expenses, such as wages, rent and operating expenses during periods of low demand, reduced sales or lockdown.
Different businesses have different reasons to borrow money. Whatever the reason is, the financial institution will approve you if you have a good financial record.
Startup business loan in the Philippines
The main problem with starting or growing a deals is finding financing for it. Whether you want to start your business from scratch or expand it to greater heights, getting financing can be the next best step for you and your business.
That is why loans for startup Philippines offered by banks and lending companies are popular among Filipino businessmen. It is a credit of money, usually secured by valuable property, with mandatory interest payments. In order to apply for a startup loan, you must have a working business plan of a profitable and interesting investment project with a specific payback period. You can get a loan if you prove your solvency and the profitability of the chosen direction.
Let’s list a few companies that can provide such a lenders. The conditions need to be found out in each of them, the requirements may vary. For example, M Lhuillier loan requirements will be less demanding than for AUB credit, because the bank treats customers more demanding. Check also First circle and Zenith capital credit loan. But more often than not, the company will require a detailed business plan and collateral in the form of real estate or valuable property.
If you are looking for a start up business loan without collateral Philippines, Digido can help. Unfortunately the amount is not very big, maximum 25000 pesos, but you only need 1 valid ID and that is it, no business plan or collateral.Apply now
Business Loan Requirements
Here are the general requirements for filing a loan for both banks and government credits for small businesses in the Philippines.
- DTI registration – document showing that your deal is approved by either DTI or the Securities and Exchange Commission.
- Bureau of Internal Revenue registration – you will be able to get this once you have a Mayor’s Permit.(3)
- Mayor’s permit – secure this from your municipality Office of the Mayor.
- Income Tax Return (ITR) – this is not required if your business is not operating yet.
- Proof of identity – government valid IDs.
- Proof of income – show your ITR or proof of cash; you can also show proof of employment and pay slips.
- Proof of address and citizenship
If you are applying for a money that requires collateral, you need to submit proof of ownership of your asset. Your asset must already be paid in full. For example, you cannot file for a loan and use your car as a collateral if you are still paying the amortization for that.Apply now
Comparison of Business loans from top Philippine banks
|Bank||Amount and Terms||Requirements||Documents|
|Security bank||PHP 1,000,000 to 5,000,000 for up to 3 years||– Duly registered to operate as a business in the Philippines;
– Must have been operating for at least 3 years, and profitable for the latest 1 year.
– Must have no outstanding debt that exceeds 40% the company’s monthly incomeOwner be required to have:
– An existing account with Security Bank OR Existing credit card (any bank; credit card number/s must be provided in application)
– Permanent residency in the Philippines;
– At least 21 years of age at the time of application and not more than 65 years of age upon maturity of the loan
|– Signed and Completed Application Form
– Copy of 2 valid IDs with photo from primary applicant / owner / authorized signatory
– Latest ITR with BIR stamp
– Latest (1) year Audited Financial Statements
– Valid DTI Registration docs
– Latest 3 months bank statement
– List of customers/suppliers and details about their dealings
– Valid Business or Mayor’s Permit
|Robinsons bank||PHP 500,000 to 20,000,000 for up to 10 years||– Sole Proprietorship, Partnership, Corporation
– Operating for more than 3 years and latest 3 years should be profitable
|– Completed SBL Application Form
– Business Papers ( DTI/SEC Registration, Mayor’s Permit, Articles of Partnership/Incorporation, By-Laws, General Information Sheet)
– Last three (3) years of Income Tax Return (ITR) and Audited Financial Statement (AFS)
– Last six (6) months bank statement or copy of passbook
– Photocopy of two (2) valid IDs with specimen signature
– Latest proof of billing (utility bill, credit card bill, etc.)
– List of at least three (3) major supplier and customer
– Collateral Documents (Copy of TCT/CCT, Tax declaration and location plan/vicinity map)
|Maybank||PHP 500,000 to 30,000,000 for up to 10 years||– Sole Proprietorship, Partnership, Corporation
|– Company Profile (kindly include product line)
– Business Papers: Articles of Incorporation with By-Laws, Latest GIS, DTI/SEC Registration, Business Permit
– Three (3) years ITR and Audited Financial Statements
– List of Customers and Suppliers with contact details
– One year projections
– Project details
– Photocopy of TCT/CCT with Tax Declaration and RETR (if applicable)
– Location Plan (if applicable)
|BDO||PHP 3,000,000 to 20,000,000 for up to 10 years||– Sole Proprietorship, Partnership, Corporation
– Business is in profitable operation for at least 2 consecutive years
– Minimum annual gross sales of 1 Million
– Business is within a BDO serviceable area
|– Accomplished and signed application form
– Copy of 1 valid ID
– Photocopy of Audited Financial Statements for the last 2 years with latest ITR
– Bank Statements or Photocopy of Passbook for the last 6 months
– Certificate of Business Registration with DTI
– Business Background / Company Profile
– Articles of Partnership AND Certificate of Registration issued by SEC
|CTBC bank||PHP 500,000 to 50,000,000 for up to 10 years||Proprietorships, partnerships and corporations who:
– are Filipino-owned
|– Duly filled-out and signed application form
– Payment of appraisal fee
– Photocopy of two (2) valid IDs of each authorized signatory
– Business registration papers issued by the Department of Trade and Industry (for sole proprietors)
– SEC Registration Certificate, Articles of Incorporation, By-Laws and latest General Information Sheet (GIS) (for corporations)
– Latest six (6) months bank statement
– Audited Financial Statements for the last three (3) years
– Income Tax Return for the last three (3) years
– Photocopy of TCT / CCT
– Photocopy of lot plan / vicinity plan / subdivision plan
– Photocopy of Tax Declaration
|Metrobank||PHP 1,000,000 to 20,000,000 for up to 7 years||– Duly Accomplished Business Loan Application Form
– One government ID
– Business Registration Certificate or Permit
– Proof of Billing
|– Income Tax Return (ITR) for the last three (3) years
– Audited Financial Statement for the last three years
– Bank Statements for the last six months
– Owner’s Duplicate Copy of Transfer Certificate of Title
– Certificate of Placement
– Tax Declaration
– Vicinity Map, Lot plan and Bill of Materials for construction.
- Business loan https://en.wikipedia.org/…
- Department of Trade and Industry Philippines https://www.dti.gov.ph/
- Bureau of Internal Revenue registration https://www.bir.gov.ph/index.php/…
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