A business loan is essential for small and medium enterprises (SMEs) for many reasons, from covering cash flow gaps to accelerating business growth.
Sometimes, other financing sources are the only way to cover your operational costs, especially when business is slow or customers can’t pay on time. A business loan is also the fastest way to diversify your business or expand your market reach.
There are plenty of business loans in the Philippines, and just as many financing sources. Since no two businesses are alike, only you – as the business owner – can decide which financing and provider suits you best. Choosing a business loan depends on several factors, such as your purpose, your financial capacity, and the urgency of your needs.
What are the basic requirements for a business loan?
Most providers require the following documents:
- A valid ID
- Loan application form
- A DTI, SEC, and/or BIR certificate of registration
- Business permit, or another official document showing your business address
- Audited financial statements and/or Income tax returns
- Other business documents such as Articles of Partnership or General Info Sheet

What are the types of business loans?
To get started, you can narrow down your business loan options into four general types:
1. Term Loan
A term loan is a business loan that disburses a lump sum of cash upfront. It is best used for funding a large one-time purchase, investment, or cash flow gap.
Purpose
Terms loans are your best option for instances such as: building a new store; purchasing large equipment, another business or real estate; or paying off existing debt.
Loan amount, terms, and repayment
Depending on the amount borrowed, a term loan can be paid within a year or up to fifteen years. In the Philippines, you can get up to ₱20 million of funding. Repayments of the principal loan plus interest is often done monthly or quarterly.
How to apply
If applying for a corporate loan or commercial loan, you can apply from the bank or provider’s office, branch, or website.
Term loan options in the Philippines
Government financial institutions also offer the following:
2. Credit Line

A credit line is a form of business loan that provides access to a set amount or ‘credit limit’. You can dip into it whenever the business need arises, and you only pay for the portion you used plus interest.
Purpose
Credit lines are best for short-term goals, project funding, cash flow gaps, or growth opportunities. Due to their always-available nature, they also serve as a good emergency fund for unexpected business spending, such as equipment repair or increasing inventory for seasons with an influx of customers.
Loan amount, terms, and repayment
Credit lines are available for up to ₱20 million; First Circle’s Revolving Credit Line goes up to ₱5 million for new clients. Repayments can be monthly, quarterly, or as a one-time payment, depending on your loan term; however, the interest rate payment is often done monthly.
When your dues are paid, your credit limit is replenished and you can borrow again without the need to re-apply. Our Revolving Credit Line, for instance, is always valid as long as you keep your business documents up-to-date.
How to apply
With First Circle, you can apply here in just one minute, and hear from us regarding your application within 3 business days. Application for other credit lines can be done at a bank branch or online.
Credit line options in the Philippines
3. Secured Business Loan
A secured business loan is a type of term loan that requires collateral. Collateral can be the borrower’s real estate, bank deposits, or other forms of valuable assets; they are seized by the lender if the borrower fails to repay the loan.
Secured business loans usually offer higher amounts and lower interest rates to borrowers, because the collateral required reduces risk for the lender.

Purpose
Like term loans, secured business loans are best for large one-time purchases or spending.
Loan amount, terms, and repayment
A secured business loan can go from from ₱500,000 to ₱35 million. It is repaid monthly or quarterly. Generally, a longer repayment period has lower monthly payments but higher interest rates, while a shorter repayment period has a lower interest rate but larger monthly payments. You may also be asked to pay appraisal and collateral registration fees before becoming eligible for this loan.
How to apply
For this type of small business loan, application is often done in person at the bank or government office.
Secured business loan options in the Philippines
4. Unsecured Business Loan
An unsecured business loan is 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.

Purpose
Depending on the amount, this loan can be used for both small recurring expenses or large one-time purchases. Credit lines also count as a form of unsecured loan, as lenders often do not require collateral to qualify.
Loan amount, terms, and repayment
Unsecured business loan terms can be from 3 months to 3 years. Most provide smaller sums from ₱500,000 to ₱5 million. Interest rates start at 2% per month, depending on the SME’s financial capacity and profitability.
How to apply
Depending on the funding sources, you may apply at the lender’s offices, bank branch, or website.
Unsecured business loan options in the Philippines
5. Startup Loans (New business loans)
A startup business loan is a financial grant to startup entrepreneurs and new business owners who have good, profitable business concepts but need capital to execute them.

Purpose
This loan is best for project funding of short-term or long-term business concepts, which require infrastructures, equipment or workers to build.
Loan amount, terms, and repayment
Financial grants often come from the government, with amounts ranging from ₱5,000 to ₱5 million. The loan terms can be several months up to 2 years depending on the business purpose. Loan is repaid at interest rates lower than 10% or even at 0%, depending on the capability, profitability, and purpose of the business project.
How to apply
To acquire this loan, borrowers must have a good reputation from previous lenders and “proof of concept”: often a profitable business model or idea, and good sales projections. These must be submitted at the lender’s office, branch, or website.
Startup loan options in the Philippines
Summary
A business loan is a big, risky move, but it is necessary to take your business further. To make an informed decision, start by knowing the right type for your needs — whether it is a term loan, credit line, unsecured business loan, secured business loan, or startup loan.
Our credit line offer
First Circle’s Revolving Credit Line is an SME loan that funds your plans and cash flow gaps whenever you need it. Our credit line has the following advantages:
- Apply once and access up to ₱10 million of re-usable credit
- Interest rates can go as low as 1.39% per month
- Processing of applications in 5 business days
- Exclusive account manager
- Minimal documents and no collateral requirements
First Circle is a multi-awarded lending company supporting SMEs since 2016. To apply for a Revolving Credit Line, click here.