Purpose of Bank Business Loans
Business loans are exclusively available to companies to address financial needs. The loan proceeds are for expansion, and purchase of equipment and machinery, to name a few. Expansion is part of the strategy for keeping up with customers’ demands.
Banks offer various types of business loans, such as term loans, invoice discounting, business credit lines, secured loans, and more. However, to enjoy the benefits of loan products, borrowers should be eligible and submit complete requirements.
Examples of Business Loans from Banks and their Requirements
Here are some of the banks that offer business loans with competitive terms in the country today:
Security Bank SME Business Express Loan
Loan Features
Loan Amount: ₱1 million to ₱5 million (no collateral for loans up to ₱5 million)
Loan Term: 12 months to 36 months
Interest Rate (per month):
- 12 months – 1.50%
- 18 months – 1.60%
- 24 months – 1.90%
- 36 months – 1.95%
Other Charges:
- Processing Fee – ₱3,000
- Documentary Stamp Tax – Principal Loan Amount / 200 * ₱1.50
- Notarial Fee
- Sole Proprietorships – ₱400
- Partnerships/Corporations – ₱800
- Late Payment Fee – 3% of the unpaid amortization
Eligibility Criteria:
- The business owner must at least be 21 years old upon loan application and should not be more than 65 years old upon the maturity of the loan.
- Should be permanently residing in the Philippines.
- Must have an existing Security Bank account with a ₱50,000 average daily balance or an existing credit card with any bank other than Security Bank
- The business must be a duly registered business in the Philippines for at least 3 years and is operating profitably for the past 1 year.
- If the business has an outstanding debt, it should not exceed 40% of its net profit.
- For corporations, simple majority owners must sign off on the loan application. If there are multiple majority owners, only 1 owner is required to sign off.
Rating
4.4/5
Security Bank
Security Bank offers attractive loan terms. Get this offer now.
UnionBank Business Loan
Loan Features:
Loan Amount: ₱50,000 to ₱1 million
Loan Term: 3, 6, 12, and 36 months
Interest Rate: 3% per month
Eligibility Criteria:
- The borrower should be at least 18 years old upon loan application.
- Must be a Filipino citizen currently residing in the Philippines.
Rating
4.7/5
UnionBank
UnionBank offers Quick Loans up to ₱1 million. Apply for this loan product now.
CTBC SME Business Loan
Loan Features
Loan Amount: ₱500,000 to ₱70 million
Loan Term:
- Short-term Loan: 30 days to 360 days
- Term Loan: 1 year to 10 years
Interest Rate: prevailing SME business loan rate when the loan is availed.
Processing Period: 21 banking days
Eligibility Criteria:
- The business must be Filipino-owned and earns a gross monthly income of ₱50,000.
- Must be operating for at least 3 years.
- With a working landline number.
Rating
4.2/5
CTBC Bank
Get the financing offer that best matches your financial needs and apply for a loan with CTBC Bank.
Bank Business Loan Requirements
The requirements usually depend on the borrower’s business type: Sole Proprietorship, Partnership, or Corporation. Some banks may request more supporting documents while others only ask for minimal requirements.
Below is a list of the typical requirements you must submit when applying for a business loan from a bank.
Sole Proprietorship
- 1 or 2 valid government-issued IDs
- DTI Business Registration
- Business Permit
- Latest Income Tax Return (ITR)
- The latest Audited Financial Statements (AFS)
- Three (3) months Bank Statements
- List of customers and suppliers with transaction details
In addition to the requirements above, a Partnership or Corporation will require more documents.
Partnership
- SEC-registered business documents
- Articles of Partnership / Board Resolution
Corporation
- Board Resolution to Borrower
- Continuing Suretyship Agreement
- Updated General Information Sheet (GIS)
Advantages & Disadvantages of Availing Business Loan from a Bank
Advantages
- Fixed Repayment Schedule It allows businesses to plan their budget and anticipate future cash outflows carefully. A fixed repayment schedule will help them avoid unnecessary expenses and prepare for unforeseen expenses.
- Higher Loan Amount Banks often offer higher loan amount compared to other lending institutions, which will not limit their capacity to address their needs.
- Achieve Business Goals Many companies can achieve their business goals as they expand their operations, which will also result in financial growth.
Disadvantages
- Properties Become Collateral A high loan amount often requires collateral. If the borrower can’t pay the loan, the lender has full control over the property.
- Due Date is Fixed No matter the company’s financial position, it must pay the loan on or before its due date. Fixed payments can sometimes be a problem for companies with fluctuating revenue, which can seriously impact the cash flow.
- Tedious Application Process The process is the most challenging for businesses because it can be cumbersome when it comes to requirements and documentation. Moreover, the disbursement of loan proceeds may take about a week or two and even more.
Conclusion
Getting a business loan from banks poses both advantages and disadvantages for borrowers. The loan proceeds can be used to grow the business operations as long as the company has excellent budget management.
Plenty of banks offer business loans with flexible terms and competitive interest rates. The best way to find the right one for you is to compare the loan products and weigh the pros and cons. Better yet, visit your preferred bank and ask for a proposal and computation to help you make wise financial decisions.
Aunt Piggyy
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