Banks as a Business Lender
Despite the rise of online lenders, which are known to give a faster and more convenient way to access finances, banks continue to dominate the banking industry thanks to the trusted reputation they have built over the years and conventional methods that Filipinos have become accustomed to.
Bank loans remain the most popular alternative, notably among business owners, for the opportunity to get extra funding in advance so they no longer have to wait until their company has made enough capital to fund growth and expansion on its own. Furthermore, bank loans provide both short-term and long-term financing solutions that can be used to meet various business goals.
On the other hand, banks have varying conditions – for instance, some need collateral while others do not but they may have stricter requirements, and it may take a while to apply for and receive approval for a bank loan. But, taking out a business loan from banks is still a viable option for generating more capital to expand businesses considering the lump sum of money that only banks can provide.
Best Banks for Business Loan in the Philippines
These are among the best banks for a business loan in the Philippines:
BPI SME Term Loan
Loan Features
Loanable 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
BDO SME Ready Check
Loan Features
Loanable Amount: ₱3 Million to ₱20 Million
Loan Term: 1-year validity with the option to renew
Interest Rate: 6.25% up to 7.25% depending on the loan term
Accepted Collateral: Real estate property such as house and lot, commercial property, vacant lot, condominium, townhouse, and mixed-used property (residential/commercial)
Turnaround Time: within 10 banking days
Security Bank SME Business Express Loan
Loan Features
Loanable Amount: ₱1 Million to ₱5 Million
Loan Term: 12 to 36 months
Interest Rates: 1.50% to 1.95% (depending on the term of the loan)
Related Fees:
- 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
Mode of Payment: Monthly via Auto-Debit Arrangement (ADA) from their nominated or identified Security Bank deposit account for New-To-Bank (NTB) clients
No collateral required
DBP Small Business Puhunan Loan Program
Loan Features
Loanable Amount: ₱300,000 to ₱1 Million
Loan Term: 1 year or 2 years subject to Debt Service Coverage compliance
Interest Rate: Fixed at 9% p.a. for a 1-year term loan and fixed at 10% p.a. for a 2-year term loan
Fees: Front-end fee of 3% based on approved and booked loan amount
Collateral Security: Post-dated checks from the non-DBP account
Mode of Payment: Monthly
PSBank SME Term Loan with Prime Debate
Loan Features
Loanable Amount: Minimum of ₱2 Million if the collateral is real estate property; ₱500,000 if against deposits
Loan Term: 1 year to 7 years from the date of availment
Interest Rate: Based on the prevailing lending rate of the Bank at the time of availing
Interest Repricing: Monthly, Quarterly, Semi-annually, Annually, and Fixed for the term
Accepted Collateral: Any prime residential/commercial/industrial property with or without building improvements, and cash deposits
Turnaround Time: within 20 banking days or less from submission of complete requirements
Some Considerations Before Applying for a Business Loan
Lender’s Reputation
The borrower must thoroughly check the lender’s reputation similar to how they were assessed by the lender throughout the loan application process. Because, in most cases, lenders that appear to have the best business loan offers are actually problematic. Do not be blinded by the lender’s product offering, instead learn from the experiences of others and look for positive reviews and high ratings.
Loan Purpose
Determining where and how the borrower will be using the loan proceeds is important because it will not only lead them into acquiring the business loan that best fits their needs, but also the terms and the amount they can only afford.
Interest Rates
Interest rate must be always taken into account since it dictates the cost of borrowing. By doing so, the borrower will be informed the soonest they land their eyes on the interest rate whether taking out a loan would be beneficial or will only lead them into further debt.
Extra Fees
Unfortunately, even the finest business lender may demand additional charges that are not immediately disclosed. So, be sure to read and double-check the list of loan expenses provided by the business lender to determine how much the loan will cost the borrower and whether there are any fees they feel are unreasonable and do not want to pay.
Conclusion
Indeed, banks continue to prove their relevance, particularly in the business world. But, to fully enjoy bank-provided business loans, business owners must also play their part by doing some research. With so many banks to choose from, it can be challenging to find the ideal bank and the business loan for their needs – but one thing is for certain, the efforts will be well worth it.