DBP Business Loan Interest Rate

Development Bank of the Philippines Company Overview

It was in 1958 when the government organized the Rehabilitation Finance Center (RFC) to provide financing for agricultural, commercial, and industrial development and reconstruct the damages brought after the war. From RFC, it was renamed the Development Bank of the Philippines (DBP). 

Today, the DBP is known as a development bank with other functions that include thrift bank functions with the primary objective catered to providing banking and financing services that will help in the long-term needs of small-and-medium scale enterprises in the country.  

Small Business Puhunan Loan Program

The main goal of the Small Business Puhunan Loan Program is to extend the much-needed credit for small businesses so they can use it as permanent working capital. Micro and Small Businesses with an active bank account with DBP or any other bank in the Philippines and without any adverse credit findings may be able to apply for this loan with DBP. 

Loan Features

Interest Rate: 

• 9% for a 1-year term loan (per annum)
• 10% for a 2-year term loan (per annum)

Loan Amount: ₱300,000 to ₱1,000,000

Loan Term: 1 to 2 years depending on debt service coverage compliance

Collateral: Post-dated Checks for non-DBP accounts

Requirements

• Duly filled DBP loan application form
• 3 years of Income Tax Return (ITR), if applicable which show a positive income for the previous year
• Interim Financial Statements (latest)
• Biodata of key officers of the business
• Business / Residence Proof of Billing
• 6 months’ current bank account statements
• 2 valid government-issued IDs
• Business Documents
  • Sole Proprietor
    • DTI Business Registration
    • Business Permit
  • Partnership/Corporation
    • SEC Registration
    • Articles of Incorporation/Cooperation and by-laws
    • Board Resolution with designated signatories to borrow
    • General Information Sheet (GIS)
  • Cooperative
    • CDA Registration
    • Board Resolution with designated signatories to borrow
    • Articles of Incorporation and by-laws
    • List of the shareholders and their respective shares

DBP RESPONSE – MSME Recovery

This loan program was created by DBP’s compliance with Republic Act No. 11494, also known as the Bayanihan to Recover as One Act which directed the DBP to offer low-interest rates and flexible payment terms to small businesses affected by the COVID-19 pandemic. 

It mainly targeted industries belonging to the agri-fishery and non-essential businesses that also included start-ups and cooperatives. 

New or existing MSME clients of DBP are eligible to apply for this loan program, but priority is given to MSMEs who are in the agri-fishery and non-essential business sectors. The loan proceeds can be used as permanent working capital, capital expenditure, new term loan to absorb existing credit lines (existing clients), or loan take-out from institutions. 

Loan Features

Interest Rate:

• 3% per annum fixed for 3 years – permanent working capital/absorption of existing credit line
• 3% per annum fixed for 3 years, reviewable – CAPEX and Loan takeout

Loan Amount:

• Permanent Working Capital – worth 1 year of fixed/operating expense, based on the latest Audited Financial Statement (AFS)
• Capital Expenditure (CAPEX) – up to 70% of the Total Project Cost (TPC)
• Loan Take-out – remaining principal liability at the time of take-out
• Absorption of Existing Credit Line – remaining principal liability

Loan Term:

• Permanent Working Capital/Absorption of Existing Credit Line – maximum of 3 years
• Capital Expenditure (CAPEX) – whichever is shorter between 10 years or the economic useful life of the asset and will be based on the projected cash flow and project cycle
• Loan Take-out – not to exceed 10 years

Requirements

• Letter of Intent
• Duly filled application form
• Signed Data Privacy Consent Form
• ITR with supporting financial statements
• Latest Interim Financial Statement
• 2 valid government-issued IDs with photos
• Mayor’s Permit and Barangay Permit
• Latest SSS Form R3
• For loan amounts below ₱3 Million, the following documents in lieu of ITR and BIR-stamped financial statements:
  • Business and Residence Proof of Billing
  • 6 months current account statements

Conclusion

Start-ups, SMEs, and corporations have access to DBP’s business loan programs with competitive interest rates that help them address financing needs while also getting flexible loan offers. 

Through their existing loan programs, many businesses can have an opportunity for expansion without having to worry about high borrowing costs.