5 Types of Business Loans in the Philippines (And How to Choose the Right One)

Business loans are one of the fastest ways a growing SME can supercharge their growth, whether through easing tight cash flow gaps or business expansion. But with so many loan types and financing sources available in the Philippines, narrowing down the right one can be difficult. To make things simpler, let’s break down each loan type and the loan factors to weigh – such as your loan purpose, financial capacity, and urgency.

What are the basic business loan requirements in the Philippines?

Before choosing a loan type, make sure you can meet the standard business requirements most Philippine lenders ask for:

• A valid government-issued ID
• A completed loan application form
• DTI, SEC, and/or BIR Certificate of Registration
• Audited Financial Statements (AFS) and/or Income Tax Returns (ITR) for at least 1-3 years of operations
• Other business documents such as Articles of Partnership or General Information Sheet
• Collateral documents (if applying for a collateral loan)

Requirements vary by lender and loan type, but non-collateral loans generally require fewer documents than collateral loans. See our guide to common business loan requirements for a full breakdown.

What Is the Difference Between a Collateral and Non-Collateral Business Loan?

Before getting into loan types, it helps to understand this distinction. A collateral loan, also known as a secured loan, requires assets such as real estate or bank deposits that the lender can seize if you default. Because collateral reduces the lender's risk, these loans typically offer higher amounts and lower interest rates. In the Philippines, most traditional bank loans above ₱1 million require collateral.

A non-collateral loan, also known as an unsecured loan, requires no collateral. Because lenders take on more risk, these loans tend to have smaller maximum amounts, higher interest rates, and shorter repayment terms, though this varies significantly by lender.

What Are the 5 Types of Business Loans in the Philippines?

1. Term Loan — lump sum, fixed repayment schedule
2. Credit Line / Line of Credit — revolving access to a set credit limit
3. Receivables / Invoice Financing — cash advanced by the lender against a company's unpaid invoices or receivables
4. Project Financing — long-term, non-recourse funding tied to a specific project's cash flows
5. Special-Purpose Government Loans — targeted financing programs for women entrepreneurs, OFWs, disadvantaged business owners, and newly-established MSMEs

1. Term Loan

A term loan disburses a lump sum of cash upfront and is repaid over a fixed period, usually in monthly or quarterly installments. Most "corporate loans," "commercial loans," and "real estate loans" are a form of term loan. Other variants include equipment loans, property loans, and fleet financing, where the asset being purchased serves as collateral in itself.

Best for: Large, one-time investments: building a new store, purchasing equipment or real estate, or acquiring another business.

Loan amount, terms, and repayment: SMEs can get a term loan anywhere from ₱50,000 to ₱100 million or more, depending on the collateral provided. Repayment terms typically range from 3 months to 20 years. Shorter terms mean higher monthly payments but lower overall interest; longer terms mean easier monthly payments but more interest in the long run.

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2. Credit Line

A credit line, also called a line of credit, gives your business access to a revolving credit limit that you can draw from as needed. You pay interest only on the amount you use, and when you repay, your limit is replenished so you can borrow again without reapplying.

Best for: SMEs with short-term working capital needs and/or unpredictable cash flow needs. Because a credit line is always available, it can fund cash flow gaps, new projects, and sudden expenses. This means even SMEs with good cash flow can benefit from a credit line, especially if it has no application fees or maintenance fees – it’s the closest thing to an emergency fund a business can get.

Loan amount, terms, and repayment: Credit lines in the Philippines can go up to millions, but the final credit limit depends on the lender and your assessed business financials. Larger limits typically require collateral from traditional lenders, although private financing companies like First Circle offer up to ₱25 million in credit lines with no collateral required.

First Circle’s Credit Line Options

All of First Circle’s business financing products are non-collateral. To qualify, applicants must have an annual revenue of at least ₱1 million (B2B) or ₱25 million (B2C). B2Cs must also be operating for at least 1 year; there's no minimum for B2Bs. Apply for free and get approved in as fast as 1 business day. You pay only when you use it, with same-day drawdown and disbursements available.

1. First Circle Business Credit Line‍¹

Our flagship business financing product: a fast, flexible, non-collateral source of working capital for day-to-day operations, cash flow gaps, and unexpected expenses. 

• Credit limit: Up to ₱25 million
• Interest rate: As low as 0.79% per month
• Loan term: 1–12 months. Credit line valid for 1 year with option to renew.
  

2. First Circle Business Credit Plus‍¹

Our non-collateral financing for larger investments, with longer payment terms of up to 24 months. It's a good fit for businesses looking to expand, enter new markets, or purchase equipment and assets. 

• Loan amount: Up to ₱25 million
• Interest rate: As low as 1.49% per month
• Loan term: 13–24 months. Credit line valid for 1 year with option to renew.
  

3. First Circle Express Business Loan‍¹

Lightning-fast bridge financing for urgent business needs. Pay 0% interest, with repayment in up to one month and a one-time fixed processing fee.

• Loan amount: Up to ₱25 million
• Interest rate: 0%, plus a one-time processing fee of 1-4% depending on credit limit.
• Loan term: up to 1 month.

3. Receivables or Invoice Financing

Receivables financing, also called invoice financing or accounts receivable financing, allows businesses to convert outstanding invoices into immediate cash rather than waiting months for clients to pay. A lender advances a percentage of the invoice value upfront; once your client pays, you receive the remaining balance minus a fee. Unlike a traditional business loan, you're not borrowing against your assets or balance sheet – you’re advancing cash that's already owed to you.

Trade financing is a related concept covering broader instruments, such as letters of credit, supply chain financing, and import/export financing. If your business involves cross-border trade or long supply chains, consider it alongside invoice financing.

Best for: B2B businesses with reliable clients but long payment cycles, such as distributors, manufacturers, contractors, and service businesses that invoice on 30–90 day terms.

Loan amount, terms, and repayment: Lenders typically advance 70–90% of an invoice's face value and release the remaining balance (minus fees) once your client settles. Terms are short because they follow the invoice payment cycle rather than a fixed loan tenor.

How to apply: Requirements typically include copies of outstanding invoices, proof of the business relationship, and basic financial documents.

4. Project Financing

Project financing is a specialized, long-term funding structure for capital-intensive developments like real estate and large industrial projects. Unlike a term loan, the debt is repaid strictly from the project's own anticipated future cash flows, not the borrower's corporate balance sheet. Lenders therefore evaluate the project’s revenue projections, contracts, and risk structure, and projects are typically housed in a Special Purpose Vehicle (SPV) to ring-fence their assets and liabilities.

Typical structure: Deals in the Philippines usually require a debt-to-equity ratio of around 60/40, meaning the lender covers roughly 60% of the project cost and the developer contributes 40% in equity.

Best for: Corporations, developers, and institutional investors planning capital-intensive, long-term developments with predictable future cash flows, such as toll roads, power plants, mixed-use real estate, and large manufacturing facilities. Several large Philippine banks offer project financing for qualifying developments.

Loan amount, terms, and repayment: Deals often in the hundreds of millions to billions of pesos, with tenors of 10-25 years aligned to the project's revenue timeline.

How to apply: Apply directly with banks or financial institutions that have project finance desks. First Circle also offers project financing to existing clients. Borrowers typically present a feasibility study, financial models, long-term contracts and agreements with the project’s suppliers, and proof of the equity contribution.

5. Special-Purpose Government Loans

Special-purpose government loans are targeted financing programs for specific borrower groups like female entrepreneurs, OFWs, and newly-established MSMEs. These programs are meant to assist disadvantaged, underbanked, and underserved MSMEs that would otherwise have a hard time finding financing, by offering accessible loan terms and more flexible eligibility requirements.

Best for: MSMEs and entrepreneurs that qualify under a government-designated priority group or industry. Check Landbank, DTI Small Business Corporation (SB Corp), Department of Science and Technology (DOST), Agricultural Credit Policy Council (ACPC), or similar government agencies and programs that may be relevant to your business sector.

Loan amount, terms, and repayment: Amounts start from ₱5,000 to ₱20 million, depending on the program. Some programs offer special grace periods like 0% interest for the initial period. Repayment terms range from a few months to 10 years.

How to apply: Apply directly with the relevant government financial institution, either online or at ther respective offices.

Which Type of Business Loan Is Right for My Business?

As a starting point, consider three things: what you need the money for, how quickly you need it, and whether you have collateral.

• Not sure how much you need? A non-collateral credit line is the most flexible starting point: reusable, with no obligation to draw the full limit.
• Need over ₱25 million for a capital-intensive project? Project financing provides long-term funding structured around your project plan.
• Invoicing clients on long payment terms? Invoice financing frees up cash without new debt.
• Part of a priority group such as OFWs or MSMEs in disadvantaged sectors or calamity-affected areas? Government loan programs may offer better terms.

Always ensure you are dealing with a lender's official website, account, or loan representative. Scammers impersonating legitimate lenders are common in the business financing space.

A company loan can take your business further, but it can also be risky without a realistic repayment plan. To find the interest rates and monthly repayments you're comfortable with, see our guide to comparing business loan interest rates. If you're ready to check out available business loans and credit lines out there, see our list of 25+ legitimate business loans in the Philippines.