Bank Business Loan Interest Rates Philippines

Business Loans and Interest Rates

Business loans are lending arrangements entered into by business owners (borrowers) and banks and other business loan providers (the lender). The lender will finance the business, but in exchange, the business must repay it over an agreed timeframe, with the agreed-upon amount of interest. 

And as said, interest rates are one of the factors that business owners must consider in taking out a business loan. By definition, it is the amount charged by the lender to the borrower based on the percentage of the principal (the amount loaned). In other words, interest rates help in determining the cost of borrowing – a high-interest rate means expensive repayments and a low one means a more affordable repayment. Interest rates matter due to the fact that they influence the borrowing costs and decisions of businesses and other borrowers. 

Banks That Offer Business Loans in the Philippines

The following are some of the best banks in the Philippines that provide the most affordable business loans:

Security Bank SME Business Express Loan 

Product Features

Loan Amount: ₱1 Million to ₱5 Million 

Loan Term: 12, 18, 24, or 36 months 

Loan Rates:

Other Fees and Charges:

• Processing Fee: ₱3,000
• Notarial Fee: ₱400 for Sole Proprietorship and P800 for Partnerships and Corporations 
• DST: Approved loan amount / 200*1.50
• Penalty Fee: 3% of the past-due amount for the month 

BDO SME Loan 

Product Feature

Loans Term

• Loanable Amount: ₱1 Million to ₱20 Million
• Loan Term: Maximum of 10 years 

SME Ready Check 

• Loanable Amount: ₱3 Million to ₱20 Million
• Loan Term: 1-year validity with the option to renew 

Loan Rates:

Other Fees and Charges:

• Pre-approval Fees

Appraisal Fee (per title): ₱5,000 for collateral within a 30 km. radius from any BDO branch, and ₱5,500 for collateral outside a 30 km. radius from any BDO branch 

• Post-approval Fees
  • Handling Fee: ₱5,000
  • Notarization Fee: ₱600
  • Collateral Registration Fee: Based on the approved loan amount and standard Registration of Deeds (RD) fees
  • Documentary Stamp Tax: ₱1.50 for every ₱200 of the approved loan amount, and ₱4.75 for every ₱1,000 of the loan amount 
  • Credit Life Insurance: ₱6.50 for every ₱1,000 of the loan amount
  • Fire Insurance (FI) Premium: Based on the appraised value of the improvement on the property submitted as collateral 
  • Contractors All Risk Insurance (CARI): Based on the estimated bill of materials of the property for construction
  • Processing Fee (for SME Ready Check): Based on the percentage of approved credit line

Note: Both quoted rates and other loan-related fees are subject to change without prior notice.

BPI SME Term Loan

Product Features

Loan Amount: Minimum of ₱300,000

Loan Term: Maximum of 5 years

Interest Rate: Based on the prevailing market 

Accepted Collateral: Real estate mortgage, deposit, or investment 

Processing Fee: ₱3,500

How to Qualify for a Business Loan in the Philippines

In the Philippines, banks and other financial institutions that provide business loans have varying borrower eligibility. The majority of them, however, have the following qualifications: 

• Must be a Filipino citizen 
• Must be at least 21 years old but not older than 65 at the loan maturity 
• Business must be DTI or SEC-registered 
• With at least a year of successful operation 
• Must meet a minimum annual gross sales

Conclusion

Being an entrepreneur or starting a business entails taking risks to achieve business goals. While it may seem risky to take out a business loan from banks to fund a business from scratch or finance other business operations, it is the safest and easiest alternative next to savings. What they can do, on the other hand, to ensure that they have chosen a business loan that best fits their business needs, is to review all the factors – particularly the interest rates – that may influence their borrowing decisions.