As an entrepreneur, your business journey will always involve financing challenges such as cash flow gaps, a lack of funds for new opportunities, or unforeseen expenses. When caught unprepared, the stress of dealing with these challenges can test your confidence as a business owner, put a toll on your health, or even pose a threat to your organization’s stability.
The good news is there are tons of financing sources in the Philippines to help you prepare for financing challenges and regain control of your business finances. While a small business loan may seem like the most obvious choice, it’s best used for a large one-time expense — making it an inflexible option for businesses trying to extend their working capital for revolving expenses. Thus, for business owners who need funds for expansion, new projects, operating expenses and other revolving expenses, a credit line is the more fitting choice.
What is a credit line and how does it work?
A credit line, also known as a line of credit, is a predetermined amount of money that you can dip into for your business needs. It provides you the flexibility to borrow money up to your specified credit limit without having to re-apply for a new small business loan each time. You only pay interest on the amount you used, and your full credit limit is replenished after your small business loan is repaid.
A line of credit is usually active for one (1) year, although some providers offer shorter availability periods. Upon expiry, you can simply renew a line of credit for another year by submitting the latest versions of your business documents.
Credit lines are a lesser-known business loan option in the Philippines, but that is slowly changing as more small and medium enterprises (SMEs) look for non-collateral funding that won’t bog them down with interest rates. One reliable and reputable provider that promises non-collateral credit lines at zero upfront cost is First Circle, an SEC-registered financing company empowering SMEs since 2016.
Who is First Circle?
First Circle is a fintech company offering fast, fair, and flexible financing to SMEs. Their flagship product, the Revolving Credit Line, requires no collateral, no upfront fees, and no commitment.
This means that:
- You don’t need to pledge any assets to open a credit line;
- You won’t have to pay anything to open and maintain the credit line — you only pay if you use it;
- You won’t be required to use your credit line after it is activated.
An official financing partner of DTI and the Quezon City Local Government Unit, First Circle has helped thousands of Filipino businesses fund expansion, cover cash flow gaps, and extend their working capital. They have been consistently recognized as one of the best small business loan providers in the country, even making it to the Inquirer Growth Champions 2023 List and the Financial Times Asia-Pacific High Growth Companies 2023 List.
Who is eligible for a First Circle loan?
You can apply for a credit line as long as you meet these qualifications:
- Your business is registered with BIR, DTI (for sole proprietorship) or SEC (for partnership or corporation)
- You are a resident of the Philippines, with a government-issued Valid ID or Alien Registration Card (ARC)
- Your business annual revenue is at least ₱5 million
Where can I use First Circle loans?
First Circle loans are flexible, always-available, and can be used for any business purpose. You can use it as working capital, inventory financing, equipment purchase, operating expenses, business expansion, and funding of new projects. It’s the ideal financing option to address cash flow gaps and ensure the continuity of your operations.
What are the advantages of First Circle loans?
High Loan Amounts
First Circle’s credit lines go from ₱250,000 to ₱20 million of re-usable credit.
No Collateral or Application Fees
First Circle does not require collateral, application fees, maintenance fees, or any upfront fees to open and maintain. You only pay when you take out a loan.
Competitive Interest Rates
First Circle’s interest rate starts at 0.99% per month — the lowest in the market. This is in contrast to most business loan providers, which charge anywhere from 2% to 10% interest per month. In addition, First Circle has a Best Price Guarantee: if you have a better offer for another non-collateral small business loan, First Circle is willing to beat the price by 10%.
2-Day Application Processing
First Circle can provide business owners a loan decision in as fast as 2 business days after completing minimal document requirements. After making a withdrawal from your credit line, First Circle can credit funds to any local bank in just 1 business day.
Dedicated Account Manager
Upon submitting your application, First Circle assigns a dedicated account manager who will guide you through the process. They will help you collect your requirements at zero cost and provide personalized assistance for your financing needs once your credit line is active.
Minimal Documentary Requirements
First Circle aims to make the financing process as simple as possible for SMEs. Thus, they only have a few documentary requirements:
- Valid Government ID
- Audited Financial Statement (AFS) or Income Tax Return (ITR)
- Bank Statements for the last 3 months
- Trading Relationships and Proof of Ongoing or Upcoming Projects. These are documents to give First Circle a better understanding of your future revenue.
You can see the full list of requirements at First Circle’s website.
Pay Only for What You Use
With First Circle loans, you only pay interest rates for the amount you borrow. This ensures that you're not burdened with unnecessary costs when you're not utilizing the full credit limit. It also makes the credit line an excellent emergency fund that you can open and keep on standby until you need it.
First Circle is also upfront about the fees involved with your credit line. Before you take out a business loan from your credit line, your account manager will inform you about the processing fee involved with your transaction.
Available to SMEs nationwide
First Circle loans are open to businesses in these regions:
- National Capital Region
- CARAGA
- Region 1 - Ilocos
- Region 3 - Central Luzon
- Region 4A - CALABARZON
- Region 5 - Bicol
- Region 6 - Western Visayas
- Region 7 - Central Visayas
- Region 8 - Eastern Visayas
- Region 10 - Northern Mindanao
- Region 11 - Davao
No business age requirement
Unlike many business loan providers that require at least 2-3 years of business operations, First Circle caters to businesses that have been operating for a year or less as long as they meet the minimum annual revenue requirements. However, there is one exception for business-to-consumer (B2C) organizations, which must have a minimum operating period of 1 year.
What are the disadvantages of First Circle loans?
Open to SMEs only
First Circle loans are specifically designed to cater to SMEs; thus, they cannot cater to micro-enterprises with annual revenues that fall below ₱5 million.
Selective with customers
To better mitigate loan defaults and other risks associated with lending, First Circle uses sophisticated underwriting processes to cater only to SMEs with the best businesses and strongest potential for growth. Their clients demonstrate a certain level of financial stability, growth potential, and ability to utilize their credit line effectively.
Before proceeding with an application, First Circle conducts a consultation call with the potential client to assess if financing will actually help the business grow. Through this and other quality checks, they acquire high-quality clients and become genuinely invested in their clients’ business growth.
In addition, First Circle does not service businesses in the following industries: General Construction, Real Estate, Financing / Investment companies, Gambling, Gaming, and Multilevel Marketing.
How to apply for a First Circle loan
Step 1. Apply online
See if your business is eligible for a First Circle credit line by completing their online application form. A dedicated First Circle contact person will reach out to you to talk about your application and business funding needs in 1 business day.
Step 2. Complete your application requirements
If you receive an initial credit line offer, your First Circle contact will assist you in collecting the rest of your application requirements. Upon completion, you will receive your final loan decision in 1-2 business days. Opening a First Circle credit line is free. If you get a request to pay during the application process, report it to us immediately at support@firstcircle.com or (+632) 8580 3200.
Step 3. Use and re-use your credit line as needed
You may withdraw funds from your credit line as soon as it is activated. To take out a loan from your credit line, reach out to your dedicated Account Manager or log in to your First Circle account. First Circle disburses funds to any bank within 1 business day.
First Circle loan reviews
First Circle is an official financing partner of DTI and Quezon City LGU. Both had commended the company for continuously supporting the growth of local SMEs through accessible financing and financial literacy programs.
First Circle has also received commendations from local business organizations and governing bodies such as the Securities and Exchange Commission (SEC), Go Negosyo, Philippine Chamber of Industry and Commerce (PCCI), PhilExport, and the American Chamber of Commerce of the Philippines (AmCham).
More importantly, First Circle is highly reviewed and highly recommended by its past and current clients. As of writing, First Circle has 4.5 out of 5 stars on Google Reviews. The positive reviews frequently mentioned First Circle’s speed, efficiency, and professionalism in processing applications and loan requests. Reviewers often highlighted that their account managers were helpful, consistent, detailed, and easily accessible for queries and concerns. A number of reviews focused on the realistic loan requirements, low interest rates, flexible repayment terms and fast loan disbursement. Some business owners also commended the company for being considerate in rescheduling payments, and for taking the time to educate clients on digital transactions and business improvement.
Summary
Most SMEs in the Philippines struggle to access fast, fair, and flexible financing due to extensive application requirements, large upfront costs, and inflexible loan terms. Growing businesses find it difficult to get bigger financing amounts at low interest rates, especially if they had been operating for one year or less. And while business loans address the need for SME financing, it’s not the right fit for businesses looking to augment their working capital or create a financial safety net for unexpected expenses.
A credit line is a better fit for extending your working capital as needed. First Circle’s Revolving Credit Line does well in this regard, offering up to ₱20 million of re-usable credit with no collateral, no commitment, and no upfront costs required. It takes the pressure off delayed payments and cash flow gaps by serving as a standby source of funds that you can access any time. Since you only pay for what you use, a credit line also provides flexible financing to scale your business in new ways, such as marketing, hiring, expansion, and new projects.
Applying for a Revolving Credit Line from First Circle is quick and easy, and the company is highly-commended by its clients for its speed and efficiency in processing credit lines. Simply visit https://www.firstcircle.ph/ to start.
