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Business Loan in the Philippines: Complete Guide for New Entrepreneurs

By: Venus Zoleta
Last updated July 06, 2022

Finding good sources of funding is a critical step in starting a business. A small business loan in
the Philippines from the government, a bank, or a private lender is one viable financing option
for budding business owners.However, three in four or 77% of 100 Filipino micro, small and
medium-sized enterprises (MSMEs) surveyed by cloud banking platform Mambu[1] are unable
to secure sufficient business funding. Of these businesses that lack funding, 48% went on to
have cash flow issues and 48% failed to launch new products. To avoid experiencing such
common start-up problems, secure a loan for starting a business instead of using up your
savings or borrowing money from family and friends. Below are the basics of business loans in
the Philippines and the different types of loans for every kind of business. In this guide, you'll
find different government and bank loan options for a start-up or small business.

What is a Business Loan?

Start-ups need funding or capital to begin their operations and start earning a profit. Banks and
financial institutions lend this money in advance to these businesses through a business loan. In
turn, lenders collect payments with interests based on the agreed-upon payment schedule and
lending agreement.

A business loan in the Philippines is a financing opportunity in which lenders provide the funds
to borrowers who will start a business, expand it, or pay off debts and other expenses. For
whatever purpose they may serve, business loans are a relief to entrepreneurs who may need
extra funding for their operations.

What is the Difference Between a Business Loan, Consumer Loan, and Personal Loan?

The purpose of a business loan is to fund a business need. It may be used for business
expansion or to help pay for operating expenses.
A business loan typically offers higher loanable amounts and has more documentary
requirements because of the larger funding required to set up a business.

A consumer loan, on the other hand, is a general type of loan. Personal loans, housing loans,
and auto loans are examples of consumer loans. You can apply for any of these consumer
loans to purchase items or services for personal consumption or even to refinance debts.

When it comes to interest rates, personal loan interest rates are usually higher compared to
business loan interest rates. This is because personal loans are considered riskier for lenders.

Business loans have a longer and more thorough application process, as well as stricter
eligibility requirements. Because of this, lenders have more confidence in business loan
borrowers to pay off the entire loan with lower interest and a longer repayment period.

How Do I Qualify for a Business Loan in the Philippines?

Banks and financial institutions have different eligibility criteria. However, most of them have the
following requirements:

● Must be a Filipino citizen aged 21 but not older than 65 when the business loan matures

● Should have an SEC-registered or DTI-registered business with at least 3 years of

profitable business operations

● Must meet a minimum annual gross sales

● Good credit standing

SHORT ASSESSMENT

After you've considered all factors when choosing a business loan in the Philippines, take a look at
each type of loan. As an entrepreneur launching a startup in the Philippines, you have four choices:
term loans vs. credit lines and secured vs. unsecured loans. Use this guide to help you find the best
business loan for you. Money is a serious matter when it comes to running a business of any size,
startups included. Do your research to determine the suitable type of business loan in the Philippines
for your business needs. Spare yourself the trouble by using a free online comparison tool that can
help speed up your search for the right loan for funding your business.