Business Loans and Collateral
As the name suggests, business loans are loans designed for business purposes. And due to the significant amount business loans typically provide, lenders often require collateral to mitigate the risk on their end. Collateral is an asset promised by the borrower to the lender; it gives an authority to the lender to seize and sell that collateral to repay the debt should the borrower fails to do so.
Having said that, the benefits of applying for a secured business loan are remarkable. The borrowers may have put their assets at risk, but they are entitled to higher loanable amounts with lower interest rates and a guaranteed approval even for those with poor credit standing.
What are the Accepted Collaterals for Business Loans in the Philippines
The following are the types of accepted collaterals for business loans in the Philippines:
- Property
- Equipment
- Cash security
- Inventory financing
- Invoice financing
- Blanket liens collateral
Applicants should bear in mind, however, that surrendering the title to their assets to their preferred financing company gives them the power to confiscate their possessions should things not go as planned.
Banks and Other Financial Institutions that Offer Business Loans Without Collateral
While collateral is an important condition for taking full advantage of business loans, various financial institutions offer unsecured business loans to some businesses, too. This type of loan can be approved without the use of collateral; lenders are merely dependent on the borrower’s creditworthiness – both personal and company credit scores. Included below are the banks and financial institutions that offer business loans without collateral.
Security Bank SME Business Express Loan
Loan Features
Loanable Amount: ₱1 Million up to ₱5 Million
Loan Payment Term: 12 up to 36 months
Loan Rates:
Term | Monthly AOR |
12 Months | 1.50% |
18 Months | 1.60% |
24 Months | 1.90% |
36 Months | 1.95% |
Other Fees:
- Processing fee: ₱3,00
- Notarial fee: ₱400 for Sole Proprietorships and P800 for Partnerships and Corporations
- DST: Approved loan amount / 200 * 1.50
- Penalty fee: 3% of the past-due amount for the month
Welcome Finance, Inc Business Loan
Loan Features
Loanable Amount: ₱50,000 to ₱3 Million
Loan Terms: 12 to 36 months
Interest Rate: 1.95% to 3% per month
Payment Method: Post-dated check
No credit card needed
Processing only takes 1-2 days
DTI Pondo sa Pagbabago at Pag-Asenson (P3) Program
Loan Features
Loanable Amount: ₱5,000 to ₱200,000, depending on the size of the company and its capacity to pay. Applicants with at least one (1) employee are eligible for up to ₱200,000
Interest Rate: 2.5% per month
How to Apply for Business Loan Without Collateral
Applicants should always be reminded that requirements when applying for business loans with or without collateral vary per lender – so does the process of application. Some of the financial institutions in the Philippines take advantage of the internet to allow their applicants to enjoy seamless applications, while others still require face-to-face transactions.
In any case, applicants may complete their application on the website of their preferred provider, where they are also provided phone numbers and email addresses in case they need extra help, or they can visit the branch nearest to them, where they can be accommodated by the bank loan personnel.
Conclusion
Since the growing number of businesses in the Philipines has a significant impact on the economy, the country has ensured that those who wish to join the corporate world or simply desire to have their ideas realized will be provided with adequate financial support – with or without assets to pledge in exchange for the finances that their businesses require.