DTI Loans or BDO Business Loans: Which is better for SMEs?

Business Growth
September 8, 2022

First time getting a business loan? With so many lenders in the Philippines, it’s a safe move for small and medium enterprises (SMEs) to stick to popular, name-brand providers. These can be government providers like the Department of Trade and Industry (DTI), or local banks like BDO or BPI. 

However, going for any DTI or BDO SME loan without doing prior research can also make your loan more expensive or inconvenient. For one, traditional lenders aren’t the fastest: you’ll have to wait a minimum of ten days before you get a loan decision. Another issue is their small loan amounts, which you can only increase through collateral. Lastly, business loans from well-known lenders may have affordable interest rates at first glance – but come with multiple fees after approval.

To help you pick the right business loan, we’ve narrowed down two of the most common options for new SME borrowers: DTI Loans and BDO Business Loans.

Table of Contents
I. DTI Loans: The government option
II. BDO Business Loans: The big-money option
III. DTI loans vs. BDO business loans: Which is better?
• The most affordable: BDO
• The biggest loan amount: BDO
• The lowest-risk loan: DTI
IV. First Circle Revolving Credit Line: The fastest, most flexible option

DTI Loans: The government-subsidized option

DTI business loans are designed to assist Filipino SMEs in different industries and stages of growth.

DTI loans for small businesses cover all types of industries.

As of writing, there are 7 DTI business loans. However, new SME borrowers can only qualify for 3 DTI SME loans, all of which are unsecured term loans. The rest – which are not discussed here – require very specific qualifications, such as FMCG (fast-moving consumer goods) accreditation, tourism-related operations, or a prior record of borrowing from DTI. Check out our full analysis of all available DTI loans here

The DTI small business loans open to new SME borrowers are:

DTI Loan

DTI SME Loan Details

DTI Business Loan Requirements

RISE UP Micro Multi-Purpose Loan

Unsecured term loan for micro-enterprises

Maximum Loanable Amount: Up to ₱300,000

Basis of Loan Amount: Up to 20% of existing business asset

Loan Term: Payable monthly up to 3 years

Interest Rate: 12% per annum

Corporate documents showing your business is operating for at least 1 year, if applicable

Government-Issued ID

Barangay Certification for loans <₱100,000; Certificate or Mayor’s Permit for loans >₱100,000
Barangay Micro Business Enterprise (BMBE) Certificate
Photos and video of business operations and assets

RISE UP Multi-Purpose Loan for SME First Time Borrowers

Unsecured term loan for SMEs

Maximum Loanable Amount: Up to ₱2 million

Basis of Loan Amount: 15% of prior year sales, based on BIR-filed FS

Loan Term: Payable monthly up to 3 years

Interest Rate: 12% per annum

Corporate documents showing your business is operating for at least 3 years
Government-Issued ID
BMBE Certificate or Mayor’s Permit for loans >₱100,000
Pictures and Video of business operations and asset
BIR-filed Financial Statement (FS) for prior year reflecting positive net income
BIR-filed FS for earlier two years
Other proof of sales and/or assets

Pondo sa Pagbabago at Pag-Asenso (P3) Program

Unsecured term loan for micro-entrepreneurs

Maximum Loanable Amount: Up to ₱100,000

Basis of Loan Amount: Business size and ability to pay

Loan Term: Payable monthly up to 30 monthsInterest Rate: 2.5% interest rate per month

Corporate documents showing your business is operating for at least 1 year
Accomplished Loan Application Form
1 Government-issued ID
Business registration
DTI Business Name registration
Barangay Clearance

Is DTI online loan application available?

DTI loans for small businesses are processed through their financing arm, Small Business Corporation (SB Corp). DTI online loan applications can be done at SB Corp’s website.

BDO Business Loans: The big-money option

Business loans from BDO are a better fit for SMEs needing large amounts.

BDO (BDO Unibank, Inc) is one of the largest and oldest private banks in the Philippines. They serve both businesses and individual customers through more than 1,000 branches nationwide.

BDO business loans have two types: term loan and credit line. They have very different purposes and benefits, but both can offer up to ₱20 million for borrowers that present real-estate collateral.

BDO Business Loan

BDO SME Loan Details

Loan amount

BDO SME Ready Check

Secured credit line

Loan Amount: ₱3 million to ₱20 million

Basis of Loan Amount: Up to 70% of real estate collateral value; loan purpose; current income

Loan Term: Payable monthly up to 1 year, with an option to renew*

Interest Rate: 6.25%-7.25% per annum; after the initial fixing period, interest rate will be repriced annually

*At least 5% of the availed amount must also be paid every quarter, in addition to documentary stamp tax (DST) and other fees

Must be in profitable operation for at least 2 consecutive years, with minimum annual gross sales of ₱1 million
Audited Financial Statements
Certificate of Registration from SEC; Articles of Incorporation; or By-Laws 
Latest General Information Sheet
List of top customers and suppliers with contact information
Bank Statements from the last 6 months
Collateral documents
 Company profile
Full list of documentary requirements

BDO Term Loan

Secured or unsecured term loan

Loan Amount: ₱1 million to ₱20 million

Basis of Loan Amount: Up to 70% of real estate collateral value

Loan Term: Payable monthly up to 10 years

Interest Rate: 6.25%-7.25% per annum; after the initial fixing period, interest rate will be repriced annually

Must be in profitable operation for at least 2 consecutive years, with minimum annual gross sales of ₱1 million
Audited Financial Statements
Certificate of Registration from SEC; Articles of Incorporation; or By-Laws 
Latest General Information Sheet
List of top customers and suppliers with contact information
Bank Statements from the last 6 months
Collateral documents
Company profile
Full list of documentary requirements

Is BDO online loan application available?

BDO online loan applications can be done via the BDO website. You may also visit BDO branches or loan centers to complete your BDO loan application.

DTI loans vs. BDO business loans: Which is better?

BDO SME loans have a slight edge over DTI loans, but there are better options than both.

Most affordable: BDO Term Loan (but with certain considerations)

With an interest rate of up to 7.25% per annum, and a loan term of up to 10 years, BDO Term Loan beats the other loans above. However, this loan is riskier and not necessarily the best business loan in the market for the following reasons:

  • It requires collateral. You need to put up real estate property to secure amounts higher than ₱1 million. If you default on your loan, you will lose your collateral.
  • Variable interest rate. BDO specifically mentions that the interest rate will be repriced annually after the fixing period. This means that your annual interest will go higher than 7.5%, depending on the market lending rates set by the Bangko Sentral ng Pilipinas.
  • It comes with multiple fees. BDO has a handling fee of ₱5,000; appraisal fee; pre-approval and post-approval processing fees. You also need to pay for insurance to protect your collateral.
  • Lengthy loan approval. BDO loan application takes up to 10 banking days before you can receive a loan decision, provided that you have submitted complete requirements beforehand. This may not be ideal if you need the money urgently.
  • Multiple BDO loan requirements. You won’t qualify if your business has been operating for less than 2 years, and you’ll have to submit numerous documents.

Biggest Loan Amount: BDO Term Loan and BDO SME Ready Check

You can borrow up to ₱20 million for both BDO SME loans; the final amount will depend on the value of your real estate collateral. Just remember that these two loans have different payment terms and should be used for very different purposes:

  • BDO Term Loan: Best for long-term goals and large one-time purchases of real estate, another business, or facilities
  • BDO SME Ready Check: Best for buying seasonal inventory, addressing operational expenses, and paying suppliers while waiting for customer collection

In the case of BDO SME Ready Check, aside from providing collateral, borrowers must also keep the following risks in mind:

  • Short repayment terms. Borrowers must have a clear repayment plan in mind, especially if they are granted large amounts with only 1 year to pay. 
  • Extra 5% loan payment per quarter. The irregular repayment scheme will mean your business will have less capital than usual every quarter.

A faster, less risky alternative to BDO SME Ready Check is First Circle’s Revolving Credit Line. Without collateral, you can still borrow up to ₱10 million within 5 business days. Just complete our online application process and submit two initial documents to get a conditional credit line offer.

Lowest risk: RISE UP Multi-Purpose Loan for First-Time SME Borrowers

DTI business loans offer up to ₱2 million without collateral – making it a good option for SMEs that don’t have stable income or a firm repayment plan.

In addition, DTI has a grace period of up to 12 months for most of their loans. This gives SMEs enough breathing space to plan what to do with their funding. This DTI loan, however, comes with certain limitations:

  • Up to ₱2 million maximum loan amount only
  • SME applicants must be in operations for at least 3 years
  • Lengthy application process; on the SB Corp Facebook page, some applicant report a waiting time of months before getting an update on their application
  • Some applicants also reported having a hard time using SB Corp’s website for the DTI online loan application

To augment your DTI loan and ensure you have enough funds for your business needs, let First Circle’s Revolving Credit Line help.

Instead of a DTI SME loan or BDO SME loan, businesses can go with First Circle's Revolving Credit Line due to many reasons.

First Circle Revolving Credit Line: The fastest, most flexible option

First Circle, a financial technology company empowering SMEs since 2016, is the trusted digital financing partner of DTI and SEC.

Our non-collateral SME loan, the Revolving Credit Line, is best for growing businesses that encounter regular cash flow gaps, or need funding to secure new opportunities and day-to-day operations. 

  • Up to ₱10 million in a re-usable credit line
  • Interest rates as low as 1.39% per month
  • Loan terms of up to 1 year renewable
  • Processing of applications in 5 business days
  • Dedicated account manager
  • Initial requirement of 2 documents only: Audited Financial Statement, and Articles of Partnership/General Information Sheet

Business owners will only pay interest on the portion of the credit line used, and there are no processing fees for applications. This makes the Revolving Credit Line an excellent emergency fund option for SMEs, as you won’t have to pay anything until you use your credit line.

Does First Circle accept online loan applications?

Yes. Just visit our onboarding page to apply and see if you qualify for a Revolving Credit Line. You should hear from us regarding your application within 3 business days!

DTI loans and BDO business loans are viable options for SMEs, but ultimately, it is up to you to decide which is the best match for your funding needs and repayment capacity. If you are not ready to risk collateral, go for DTI loans; however, if you need a large lump-sum amount to invest in your business, BDO business loans are a better option. Whichever option you choose, we still recommend getting a Revolving Credit Line to secure your business and augment your loan amount!

Ready to get your own revolving credit line?

Apply 100% online, and get a credit line worth up to ₱5M. Use and re-use your credit limit anytime you need a business loan.

Apply for a Credit Line

Continue reading