Finding a suitable business loan in the Philippines can be a time-consuming process, with so many financing companies operating in both the public and private sector.
While interest rates and loan amounts remain the most critical factors, there are other things you should consider in shopping for a small business corporation loan. This ensures you get the best offer for your needs, without putting yourself at risk of defaulting.
Table of contents
I. How to compare the best business loans
II. Which business loan types are covered?
III. Business loan comparison table
• Credit Lines
• Secured Term Loans
• Unsecured Term Loans
IV. Does my business have to be registered to qualify for a business loan?
V. Does my business have to be profitable to qualify for a business loan?
• The best non-collateral loan: First Circle
• The best collateral loan: It depends!
• The simplest business requirements: SeekCap
• The fastest application process: First Circle
VII. First Circle’s Revolving Credit Line Offer
Before proceeding, it’s best to have the following questions answered:
- How much money do you need?
- What is the monthly interest rate that you can afford to pay?
- How much are you willing to pay monthly, and for how long?
- Is the application process fast and easy?
- How soon will you need the money?
By loan type
Your purpose for the business loan can quickly determine the best loan type for your needs. For instance, term loans often provide bigger amounts than credit lines, so they are best for long-term goals or large one-time purchases. The downside: most lenders have slow processing times, especially if a collateral assessment is involved.
Credit lines – especially the non-collateral type – are more suited for short-term goals, such as covering cash flow gaps, increasing inventory, or repairing equipment.
Secured loans require a valuable asset or “collateral” that guarantees your capability to repay financing companies. They are riskier as you can lose your collateral if you default. However, they can have lower interest rates and bigger loan amounts than unsecured loans.
By interest rate
An interest rate is basically the “rental fee” you pay your lender for letting you borrow money over a certain period. For example, if you are paying P10,000 in exchange for borrowing P100,000, then your interest rate is 10%.
A lower interest rate is generally better – as long as you clearly understand the different terms providers use to describe their business loan and interest rates. Check out our full guide to comparing interest rates here.
By loan terms and repayments
In general, a loan with years of repayment has lower monthly payments but higher interest rates. A loan with a short repayment period has a lower interest rate but larger monthly payments.
Most business loans have processing fees, and you may also be asked to pay appraisal and collateral registration fees.
By company reputation
Financing companies in the Philippines vary in accessibility, ease of loan application, and speed of loan disbursement. The right one should help you go through the application smoothly; ensure you understand your loan’s terms and conditions; and provide funds just when you need it.
Read Google Reviews to know their service quality: how fast they respond to inquiries, the length of their processing times, or even how they support clients through extraordinary circumstances such as the pandemic.
We have categorized our comparison table according to the following types:
- Term loan. This type of business loan disburses a lump sum of cash upfront. It often requires collateral, and can be repaid for longer terms than a credit line.
- Credit line. A form of business loan that provides access to a set amount or ‘credit limit’, which you borrow from partially or in full whenever a business need arises. Upon repayment of the borrowed amount, you only pay interest on the portion of the credit limit you used.
- Secured business loan. A type of term loan that requires collateral, such as real estate, banking statements, or other valuable assets.
- Unsecured business loan. A type of term loan or credit line that does not require collateral. Because the risk is higher for lenders, they often have smaller loan amounts, higher interest rates, and shorter repayment terms.
Ready to get your own revolving credit line?
Apply 100% online, and get a credit line worth up to ₱20M. Use and re-use your credit limit anytime you need a business loan.