All About Business Loans in the Philippines

Looking to create a new business in the Philippines, but unsure where to start? Trying to build your capital to support an upcoming business venture?

Well, this article is perfect for you!

Financing a business can be difficult—and the biggest roadblock to starting your own business in the Philippines can be acquiring enough funds to run it. But, thankfully, that’s where business loans come in, and that’s what we’re here to discuss, too!

Learn everything you need to know in applying for a business loan in the Philippines: what they are, what they do, where to get them, and what to consider in securing one.

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Written by: Piggyy

Business Loan Offers


Bank of the Philippine Islands

Avail of low interest rates with BPI. Do not miss this offer.


Philippine National Bank


Sterling Bank of Asia

Sterling Bank of Asia offers different loan types for individuals and businesses. Check out their loan products now.



Take advantage of competitive loan rates. Apply for a loan with UCPB now.



Loan Term

2 - 12 months

Est. APR

% 80.6 - 185

Loan Amount

Php2,000 - Php 500,000

What are Business Loans?

Business loans are funds acquired from a financing institution. These can come in the form of government loans for small businesses in the Philippines, commercial bank loans (e.g., BPI business loans), or private lender loans. These are all geared towards starting or expanding a business.




This can help start-ups in need of capital or expand businesses to buy additional equipment, pay for orders, or finance company expansion plans.


Even with business growing, availing of a business loan may be a good idea. This is especially true if you’ll be using it to add facets to the business that will benefit it and help it thrive in the long run.


Business loans tend to offer much more than other kinds of loans. For instance, personal loans typically peak at Php 2 million for most commercial banks. On the other hand, business loans can reach as high as Php 20 million, with significantly lower annual interest rates (around 7.5% per annum vs. more than 10% per annum for other loans).


There are many kinds of business loans available in the market. These loans differ in terms and conditions but can all be used to finance your business needs. 


Let’s talk about each one in more detail:


Types of business loans in the Philippines


Term Loan

Term loans allow its lenders to have extra funding without sacrificing any of their existing financial resources. As a result, they have money to spend while still keeping their financial resources intact. Term loans are perfect for both short- and long-term business needs, especially for small to medium enterprises (SMEs), who are looking to:

  • Buy equipment to expand the business or up production
  • Renovate, construct, or essential business properties for the company (e.g., office space, store, warehouse)
  • Add fixed capital for the business
  • Finance a franchise


Term loans also have easy repayment options that won’t break the borrower’s budget. Term loan payments are usually spread out into monthly installments, payable over a certain period. These loans can range anywhere from Php 100,000 to Php 20 million, which the borrower will receive as a lump sum—usable for anything the borrower needs to finance. Loan tenor can range anywhere from 5 to 15 years, with the average being 10 years for long-term loans; and up to 1 year for short-term loans. Interest rates vary for term loans with the average being 7.5% per annum.


Credit Line

A credit line is a short-term loan that grants you access to a specific amount of money but gives you a sense of control over your finances. Credit lines only charge you interest for the amount of money you used from your overall credit line. So, if you have a credit line of up to Php 1 million, but only used Php 200,000, you will only be charged interest for the Php 200,000 that you spent.


A credit line is an excellent option for businesses to finance short-term transactions. It can also be helpful as a safety net for seasons where unexpected expenses can happen. Additionally, it can be utilized for expenses that may be too expensive to be charged on a regular credit card but too little to require a loan. Finally, a credit line is also perfect for businesses that want the capacity to access some fast cash when needed or necessary.


However, it’s important to note that credit lines come at a higher interest rate than regular loans, given that they only charge interest for money spent. Credit lines usually range from Php 500,000 to Php 20 million in the Philippines. Lenders usually fund these loans through the borrower’s business checking account, where funds or checks can be issued to.


Credit line loan terms usually last for only a year but can be renewed annually if the lender wishes to.


Secured Business Loan

Business loans typically involve a considerable sum of money, which is why most lenders require collateral before approving a loan. Business loans that involve collateral are called secured business loans.


Collateral is an item or property of high value that guarantees that the borrower will pay off the loan. For example, suppose the borrower fails to fulfill the terms of his loan. In that case, the lending institution (be it a bank, online lending facility, or a government agency) is legally allowed to claim and acquire the collateral.


Collaterals significantly reduce the risk for lenders, as they will be able to get something of high or equal value to the cost of the loan. In addition, because they require collaterals to be approved, secured business loans typically have lower interest rates, higher loan amounts, and even longer loan terms than loans that do not require collateral.


Secured business loans are perfect for businesses that require huge capital to start and are confident in their ability to pay off their loan. Note that a term loan or a credit line can simultaneously be a secured business loan.


Unsecured Business Loan

Unsecured business loans are the opposite of secured business loans. These do not require collateral for the loan, meaning your application can be considered even if you don’t have an asset to leverage.


However, not requiring collateral poses more risks to the lender, especially if the borrower defaults on the loan. For this not to happen, unsecured business loans have extremely more stringent standards compared to secured loans.


For instance, lenders who do not require collateral will likely reject applicants with bad or poor credit history or standing. They will probably offer loans at a lower maximum amount than secure ones, too, and will likely have shorter loan terms and higher interest rates as well.


Why Get a Business Loan?

As you can see, business loans are incredibly flexible. They offer a massive variety in what they cover—starting up a new business, expanding a franchise, buying more supplies, adding modern equipment, investing in a bigger and wider office, and much more. So if you’re a start-up hoping for a way to gain capital and launch your business, a business loan can surely help as well.


Business loans are versatile in what they can cover. So long as your reasons are related to your business and your loan falls within the amount they can give, you can apply for a business loan. Still, this is not an easy loan—make sure to only apply for one if your business truly needs it.


Thus, if there’s anything you need to make your business better, a business loan is a great solution for you. They also offer great features for business, including good terms for payment and competitive interest rates. However, note that these interest rates may vary—those with required collateral will offer lower interest rates than those willing to offer unsecured business loans. 


What’s more, business loans accept online revenue or at least have flexible payment options. This allows you diversity in terms of repaying the loan in the future without worrying about missing any payment! Of course, the best thing you can do is to check which institution offers payment options most convenient for you.


Here’s a quick look at the advantages and disadvantages of a business loan:



  • High maximum loan amount
  • Flexible in terms of use (especially if using a credit line)
  • Interest rates are quite competitive
  • Multiple repayment options



  • Approval is strict
  • Registered companies have higher chances than starting ones
  • Long waiting time for approval

Should You Get a Business Loan?

All these being said, how do you know if it’s a good decision for you to get a business loan? And how do you know if you should perhaps forego this option?


Well, if you’re confident in your product and its potential to make it big – or even bigger – then you should definitely try getting a business loan. This is sometimes a necessary step to equip your business with other needed facilities, machinery, or manpower to grow and perform better. If done at the right moment, a business loan can certainly help your business expand and grow more revenue.


It’s also an ideal choice if you plan to scale up your production, add to your inventory, hire more employees, or be more aggressive in marketing your products. There are many ways that a business loan can help your company – and if you’re ready to take your business further, then a business loan can be a good idea.


However, if you’re only applying for a loan with no concrete plan in mind, it might not be the best plan of action for you. After all, business loans are a huge commitment; they are an investment for the future, which you will pay over for years to come. But, unfortunately, they also come at quite a steep price.


Therefore, you must think things out before taking a business loan. Is your company ready for change and growth? Do your people have the needed skill set to handle a growing company? Is it the right time for you to scale up? Do you have a comprehensive business plan for the changes that will come after you take a business loan?


If you answered no to any of these questions, perhaps take a step back for some time to check if there’s anything else you can do before taking the next big step of availing a business loan.


Additionally, you should also check out if taking out a loan is an option for you. Perhaps if you’re just starting, without a good credit rating to back you up—a business loan may not be on your horizons, then. There are also significantly fewer business loan financers compared to other loans, so this may limit your options as well. 


Where to Get Business Loans

Now that you’re more informed about how business loans work in the Philippines let’s talk about where you can get one. Two primary lenders in the country offer a business loan: traditional banks or alternative and online lending facilities. Here’s how each one works:


Traditional banks

When it comes to business loans, traditional banks offer the most competitive interest rates. They can also provide loans reaching Php 20 million, if necessary. However, the downside to conventional banks is that applying for a loan with them takes time. Hence, if you’re looking for fast loan approval for a business loan in the Philippines, commercial banks may not be your best bet. In addition, most banks don’t process applications online, so you’ll have to collate hard copies of your bank loan requirements and submit them in person.


Bank loan requirements are generally the same across banks, so make sure to prepare the documents you need before sending in your application. Here are some usual bank loan requirements in applying for business loans:

  • Two valid IDs
  • Income Tax Returns for the business for the last 3 years
  • Photocopy of audited financial statements for the last 3 years
  • Bank statements for the past 6 months
  • Company profile
  • Certificate of Business Registration from DTI (sole proprietorship) or SEC (partnerships or corporations)


Acquiring these documents should be easy, as you usually have them with you already. However, if you find that you don’t have some of the documents here, take into account the time you’ll wait to acquire them before applying for a loan.


Alternative and Online lending companies 

Many online lending companies in the Philippines offer legit online loans—yes, even business loans. You can check out these online lending facilities if you’re looking for extra convenience and a quick and easy loan in the Philippines.


This option is also perfect for you if you don’t have an exceptional credit history, which most commercial banks look for. Plus, an online lending company in the Philippines doesn’t usually ask for collateral, so this can be a good choice for you if you’re looking for unsecured business loans.


These institutions have a relatively faster turnaround time than commercial banks! Some online lending facilities have a quick loan approval period—they typically process online loan applications within a day, so they’re the best choice for those looking for some fast cash for their business needs.


However, finding an online loan with low interest might be challenging. Since legit online loans for businesses don’t typically require collateral, they need to compensate for this lack of security by charging higher interest rates. The convenience and ease of securing an online loan are also factors behind higher interest rates for these online loans. These are things that you may need to consider if you’re hoping for an online loan at low interest.


Things to Consider When Applying for a Business Loan

Now that you know where to secure a business loan in the Philippines, the last piece of information you need is what exactly to consider when applying for a business loan.

With a wealth of options in the market, it can be challenging to know which business loan is perfect for you. What’s more, business loans require high capital and a lot of commitment, so it’s crucial that you get a loan you will be happy with. Here’s what you need to check to find the best business loan for you:


Loan Tenor

One of the critical things you have to check out is how long you have to pay off the loan. Although a longer loan tenor means that you will be paying off your loan for a longer time, it also means that you have less to pay for every month. This is an important consideration if you’re on a tight monthly budget or if you’re loaning an incredibly huge amount.


Ideally, look for loans that allow you to pay for up to ten years. Business loans in the Philippines can even let you pay for 15 to 20 years, though this is only for higher loan amounts (e.g., Php 20 million). You should also compute your money and how much you can shell off each month to pay off your loan. This is a great way to ensure you can stay faithful to paying off your loan even after some time.


Repayment terms

It’s also good to look for a business loan that will allow you more freedom and flexibility in terms of your repayment options. For example, some business loans only accept fixed monthly payments, while others allow for flexible monthly amortizations. Choose one that will let you pay off your loan the easiest way possible.


Also, if your mode of earning is primarily online, go for business loans that accept online revenue as payment. It’s best to stick with a loan that gives you the convenience of paying through the method you want—be it through online payment channels, over-the-counter payment, or other payment facilities. It’s also a bonus if the lender offers multiple ways for you to pay off the loan quickly and easily.


Documentary requirements

Lastly, check out what documents your chosen loan provider will require from your end. Since business loans involve a considerable sum of money, expect to provide many documents to demonstrate your credibility and ability to commit to a long-time loan.


Still, documentary requirements don’t mean that the loan application process can’t be simple. So stick with loaning facilities that ask for relevant documents from you—those that only require simple, straightforward requirements that make sense.


Also, since application documents tend to contain sensitive information about you, take extra caution in handling these documents. Only send these over to institutions you can trust, regardless of whether you’re applying with a bank or an online lending company in the Philippines.


Applying for a Business Loan in the Philippines

If you’re set on applying for a business loan in the country, here are a few steps and/or requirements you will be asked to provide. Of course, some lenders don’t ask for all of these, but others can be even more stringent in their requirements.

As always, we encourage you to research what each financing institution requires from you. Here are some of the most common ones, though:


Submit your business plan or company profile

When you’re applying for a business loan, lenders will want to know if your business can generate enough income to pay off your loan. Because of this, lenders tend to ask for some background information regarding your company and the nature of your business. They may ask for your company profile, business background, or a copy of your business plan to acquire this information. As such, you should be ready with these documents as part of the documents required for your application.


Provide a collateral

If you’re deemed a potential borrower, the next thing that lenders may ask from you is collateral. Your collateral may be related to the business or a personal asset corresponding to the cost you’re loaning. This serves as a guarantee for lenders that you won’t flake on your loan and will be paying it off religiously each month.


If you cannot pay off your loan, your lending institution will legally be allowed to take proprietorship of your asset. This will enable them to mitigate their losses from people who default on loans as well. 


Provide evidence of your audited financial statements (income vs. expenses)

To understand your company’s financial standing, lenders will also be asking you for copies of your audited financial statements. This allows them to ensure that your business has consistent cash flow and that you will pay off the required dues each month for the loan.


Submit the business’ SEC and BIR registration

Business loans are only provided to registered companies in the Philippines, which have a record with the Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR). In addition, most banks require businesses to be operational for at least three years already and to be profitable for the past year.

Frequently asked questions

How do I get a business loan?

To get a business loan, you should consider how much you’re planning to lend, and what you will be using it for. It must be absolutely necessary for your business’ growth for you to get a business loan; otherwise, you risk spending more than necessary, without any benefit to your business.


Once you’re sure about how much and why to loan, you can check out available lending options in the country. Most business loans in the Philippines are offered by commercial banks, like BPI business loans. These banks offer varying amounts and interest rates to prospective borrowers. You can also check out peer-to-peer lending platforms, or other online lending facilities, and their business loan products.


Once you have decided on one (or a couple) of business loan providers, the next thing you need to do is to collate all of their needed requirements. This will range from your identification (via valid government IDs) to financial statements, SEC/BIR registrations, and your company profile. Make sure to prepare a suitable collateral as well, if you’re planning to apply for secured business loans.


Once you have submitted your application, all you have to do is to wait until the lender gets back to you regarding your loan.

Can business loans be used for refinancing other debts?

As much as possible, you should avoid obtaining a loan in order to pay off your other loans. This will ultimately cost you more money in the long run, and possibly drive you to bankruptcy. The accumulated interest of all your loans, for instance, will definitely make a dent in your budget and wallet.


If you’re planning to apply for a business loan, it should be because your business needs it. That includes office expansion, more aggressive marketing, or buying more facilities and equipment for your business. These are activities that will benefit your business in the long run, and possibly translate to more income potential.


If you will only be loaning to refinance your other debts, that won’t be a good idea. Additionally, your business loan application may not be approved if it won’t be used solely for your business.

When should business loans NOT be used?

If you have a lot of existing debt, you should think twice before applying for a business loan. This may add already to your existing expenses, and you may find it difficult to pay them off at the same time.


Additionally, if you don’t have a plan on how to use the business loan for your business’ growth, it may not be the best time yet to loan for one. Relying upon a business loan to cover other company expenses, without making a plan on how to increase your business revenue, is also a bad idea. This may not be sustainable in the long run and is a sign that your business is spending more than it earns.

Can I apply for a small business loan online?

It’s perfectly possible for small business loans online. There are peer-to-peer and other online loaning platforms that operate completely online, allowing you to apply for a business loan without having to leave your home. However, it’s important to make sure that the online lender you’re planning to borrow from is a reliable one.

What are the essential differences between various short- and long-term business loans?

The greatest difference between short- and long-term business loans is, as their name suggests, the length of period for repaying the loan. Short-term business loans tend to be available more quickly and can be used right away to pay for short-term business needs (e.g., new machinery). These are normally payable over one year and are more readily available. A great example of this kind of loan is a credit line.


Long-term business loans, meanwhile, are usually repaid over a longer period. This can be used for projects or needs of the business that need time to get realized (e.g., building a new factory or building).


As a direct result of their loan tenor, short-term business loans tend to be smaller in the amount than long-term business loans. This allows borrowers to pay a reasonable amount of money every month (if only for a longer period), even for a high amount of loan.

What are the kinds of business loans?

There are two main kinds of business loans: term loans and credit lines. 

Term loans allow businesses to spend money without getting money from their current resources. In a sense, you can look at this as a lump sum of money loaned to the business for whatever purpose they might need it.


In contrast, a credit line is a short-term loan that gives you access to a certain amount of money. Think of this as a credit card, but with a higher credit limit. With a credit line, you can make your necessary expenditures, so long as it falls within your credit line’s limit.


For instance, you can spend Php 300,000 right away if your credit line is worth Php 1 million. You will only be charged for the Php 300,000 you will spend—and you won’t incur any interest for the money you didn’t touch.


Now, these two loans can have two sub-categories. Loans can either be secured or unsecured. Secured loans require you to provide collateral, whereas unsecured loans don’t require one. Therefore, you can have a term loan that is either secured or unsecured. In the same vein, you can have a credit line that is either secured or unsecured.


Well, there you have it! That’s everything you need to get started with applying for a business loan in the Philippines. Hopefully, you were able to understand the process and intricacies of applying for a business loan in the country.


״The secret of happiness, is not found in seeking more, but in developing the capacity to enjoy less״ - Socrates

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