Business Loan for SMEs in the Philippines

What is a Business Loan?

Business loans are a type of financing that is specifically catered to companies who need it for the following reasons: plant expansion, product improvement, working capital addition, acquisition of a new asset, debt payment, etc. Like any other loan product, a business loan is offered either as a secured or unsecured type of loan. A secured loan requires collateral, while an unsecured loan is a non-collateral type of loan that requires the borrower to have a good credit standing.

Where to Apply for a SME Business Loan?

There are a lot of loan providers which SMEs can apply from. Aside from traditional loan providers, government agencies have also established assistance programs for SMEs that could help business enterprises with their financial needs. 

Examples of SME Business Loan providers are the following:

BDO SME Loan

Term Loan 

This loan product is applicable for the following purposes: new assets purchase (machinery or equipment), real estate property purchase, repairs or renovations.

Loan Amount: up to 70% of collateral’s value (between  ₱1,000,000 to  ₱20,000,000)

Loan Interest: 

• New SME Loan Applications
  • Fixing Period between 1 to 2 years: 6.25% per annum
  • Fixing Period for 3 years: 6.75% per annum            
  • Fixing Period between 4 to 5 years: 7.25% per annum

• Existing  SME Loan Borrowers: Based on applicable repricing interest rates. 

Loan Term: up to 10years

SME Ready Check

This type of loan is a revolving credit line available for buying product inventories, supplies, and additional working capital.

Loan Amount: up to 70% of the collateral’s value (between  ₱3,000,000 to  ₱20,000,000)

Interest Rate: 

• New SME Loan Applications
  • Fixing Period between 1 to 2 years: 6.25% per annum
  • Fixing Period for 3 years: 6.75% per annum            
  • Fixing Period between 4 to 5 years: 7.25% per annum

• Existing  SME Loan Borrowers: Based on applicable repricing interest rates. 

Loan Term: up to 1 year, renewable

Security Bank

SME Business Express Loan

This type of loan is ideal for addressing the short-term needs of businesses – day-to-day cash requirements, equipment purchases, or renting out office spaces. For loans that are less than ₱5,000,000, collateral is not required. 

Loan Features:

Loan Amount: ₱1,000,000 to ₱5,000,000

Loan Term & Interest Rate:

• 12 months – 1.50%
• 18 months – 1.60%
• 24 months – 1.90%
• 36 months – 1.95%

Other Fees and Charges:

• Processing Fee: ₱3,000
• Late Payment Fee: 3% of unpaid amortization
• Notarial Fee (Sole Proprietors): ₱400

Notarial Fee (Partnerships and Corporations): ₱800

CTBC Bank

SME Business Loan

This type of loan caters to the needs of businesses such as working capital requirements, and refinancing of existing credit facilities,  and includes a revolving credit line, short-term loan, or term loan. 

The processing time for CTBC SME Business Loans can take up to 21 working days. 

Loan Features

Loan Amount: ₱500,000 to ₱70,000,000

Interest Rate: based on the prevailing interest rates at the time of loan availment

Loan Terms:

• Term Loan: 1 to 10 years
• Short-term Loan: 30 to 360 days

Conclusion

The participation of MSMEs in the economy has always been remarkable that even accounts for 62.66% of employment in the country. They have been able to contribute to the positive growth rate of the economy and created a lot of job opportunities that helped improve the quality of life of many Filipino families. Through SME Business Loans, the SMEs in the country are empowered and they are able to focus on their growth and expansion which can, later on, create more job opportunities.