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.
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?
VI. Summary
• 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:
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.
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.
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.
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:
*offers both secured and unsecured options
Lenders ask for business registrations not just to evaluate your financials, but as a regulatory requirement. Any lender who doesn’t ask for them is not running a legal operation and must be avoided.
The registration documents most commonly requested are from the Bureau of Internal Revenue (BIR); Department of Trade and Industry (DTI) for sole proprietors; or Securities of Exchange and Commission (SEC) for partnerships and corporations.
Most lenders take on businesses which are already profitable or stable for the past few years. This reduces risks of borrowers defaulting on loans. First Circle, however, accepts businesses with recent losses, as we understand that many SMEs are still struggling to recover from the pandemic.
Startups or entrepreneurs that are just starting a business may not qualify for most of these loans. However, some government facilities such as DTI provide grants and loans specifically for startups and OFWs who are planning to start their own businesses at home.
Not to toot our own horn, but the Revolving Credit Line is the clear leader for SMEs looking for non-collateral financing. It has the lowest pricing (as low as 0.99%), a high credit limit of up to ₱20 million, and zero application fees. Many of our clients use their credit line as an emergency fund to secure their business, since they can choose to borrow from it at any time (or not at all).
For larger businesses looking for secured financing, there is unfortunately no single answer. Secured loan offers and interest rates depend heavily on the borrower’s business and collateral, as well as the lender and current economy.
BDO business loans are historically the largest and most recognized in our list, but we highly recommend shopping around for the best interest rate you can get. Unlike non-collateral loans, secured loans can't be compared as easily!
SeekCap, a marketplace of MSME business loans managed by UBX Philippines, has offers that require only 1 month’s worth of any of the following business documents: purchase order, official receipt, invoices, or proof of billing (utilities or internet). Keep in mind, however, that their requirements, interest fees, and processing fees vary per provider – and higher amounts typically come with more business requirements.
After completing our short online application form, you’ll hear from us in just 1-2 business days. And once your dedicated account manager makes contact, you’ll be asked to submit just two business documents to get your conditional credit line offer. This is unlike most providers, which provide the final loan amount and interest rate at the very end of the application process.
We would be amiss if we don’t mention SeekCap’s 1-day approval for selected loan offers. However, just like their interest fees, processing times vary per provider – some borrowers get a 1-day approval period but wait a few weeks for loan disbursement, while some borrowers wait several days after submitting requirements.
Instead of business registrations, Radiowealth Finance’s business loan only requires a proof of steady income – making it a good fit for aspiring entrepreneurs.
First Circle’s Revolving Credit Line is a non-collateral SME loan that funds your plans and cash flow gaps whenever you need it. Our credit line has the following advantages:
First Circle is a multi-awarded lending company supporting SMEs since 2016. To apply for a Revolving Credit Line, visit https://www.firstcircle.ph/business-financing/revolving-credit-line
