
Finding good sources of funding is a critical step in starting a business. A small business loan in the Philippines from the government, a bank, or a private lender is one financing option for budding business owners.
A business loan in the Philippines comes in a variety of types that suit different business requirements. Before you start searching for the right startup business loan, it helps to have an idea of the types of business loans for starters. Doing so helps you understand your options better and easily find the loan that matches your needs.
Below are the basics of business loans in the Philippines and the different types of loans for every kind of business.
Table of Contents
- What is a Business Loan?
- What is the Difference Between Business Loan, Consumer Loan, and Personal Loan?
- How Do I Qualify for a Business Loan in the Philippines?
- Basic Requirements When Applying for a Business Loan
- What are the Four Types of Business Loans in the Philippines?
- 7 Considerations When Choosing a Business Loan in the Philippines
- Final Thoughts
What is a Business Loan?
Startups need funding or capital to begin their operations and start earning a profit. Banks and financial institutions lend this money in advance to these businesses through a business loan. In turn, lenders collect payments with interests based on the agreed-upon payment schedule and lending agreement.
A business loan in the Philippines is a financing opportunity in which lenders provide the funds to borrowers who will start a business, expand it, or pay off debts and other expenses. For whatever purpose they may serve, business loans are a relief to entrepreneurs who may need extra funding for their operations.
What is the Difference Between Business Loan, Consumer Loan, and Personal Loan?

The purpose of a business loan is to fund a business need. It may be used for business expansion or to help pay for operating expenses.
A business loan typically offers higher loanable amounts and has more documentary requirements because of the larger funding required to set up a business.
A consumer loan, on the other hand, is a general type of loan. Personal loans, housing loans, and auto loans are examples of consumer loans. You can apply for any of these consumer loans to purchase items or services for personal consumption or even to refinance debts.
When it comes to interest rates, personal loan interest rates are usually higher compared to business loan interest rates. This is because personal loans are considered riskier for lenders.
Business loans have a longer and more thorough application process, as well as stricter eligibility requirements. Because of this, lenders have more confidence in business loan borrowers to pay off the entire loan with lower interest and a longer repayment period.
How Do I Qualify for a Business Loan in the Philippines?
Banks and financial institutions have different eligibility criteria. However, most of them have the following requirements:
- Must be a Filipino citizen aged 21 but not older than 65 when the business loan matures
- Should have an SEC-registered or DTI-registered business with at least 3 years of profitable business operations
- Must meet a minimum annual gross sales
- Good credit standing
Related articles:
- 14 Pandemic-Proof Business Ideas You Can Start Today
- How These Filipino Entrepreneurs Turned Pandemic Challenges Into Success Stories
Basic Requirements When Applying for a Business Loan
Prepare the following documents when applying for a small business loan in the Philippines.
- Valid government-issued ID (Passport, Driver’s License, TIN ID, PRC ID, Postal ID, or UMID)
- Proof of business billing address (Mayor’s Permit, Lease Contract, Utility Bills)
- DTI or SEC Certificate
- BIR Certificate of Registration
- Photocopy of audited financial statements
- Business background/company profile
- Accomplished loan application form
What are the Four Types of Business Loans in the Philippines?
1. Term Loans

What is a Term Loan?
A term loan allows entrepreneurs to meet their short-term or long-term business funding needs while keeping their own funds intact. This is a great small business loan option in the Philippines for startup owners who want to make their loan repayments more manageable by spreading them out in regular installments.
Is a Term Loan Right for My Business?
Term loans are ideal for short-term or long-term funding for the following purposes:
- New equipment for increasing production or expanding a business
- Construction, renovation, or purchase of office space, store, warehouse, and other properties
- Adding fixed working capital to a business
- Loan for a franchise business
Loan Amount
Lenders provide term loan amounts ranging from PHP 100,000 to PHP 20 million.
Method of Funding
Borrowers receive the full loan amount as a lump sum credited to their deposit account.
Loan Term
Short-term loans are payable within a year, while long-term loans can be paid up to five to 15 years, depending on the lender.
Repayment Mode
Most term loans for businesses are paid back in fixed or equal monthly payments that include both the principal and interest.
Read more: Guide to Writing a Business Plan for Securing a Loan
Term Loan Options for Startups in the Philippines
Loan Name | Loan Amount | Loan Term | Interest Rate | Repayment Term |
---|---|---|---|---|
BPI SME Term Loan | Minimum of PHP 300,000 | Up to 5 years | Prevailing market interest rates | Monthly amortizations |
Metrobank SME Term Loan | PHP 1 million-PHP 20 million |
| “At competitive interest rates” | Monthly or quarterly amortizations |
OWWA Loan (for OFWs) |
| Up to 7 years | 7.5% fixed for the entire loan duration | Monthly amortizations |
PSBank SME Term Loan with Prime Rebate |
| Up to 7 years | Prevailing PSBank rate at the time of loan availment | Monthly amortizations |
Security Bank SME Business Mortgage Loan | PHP 1 million-PHP 20 million | 1-10 years | 7%-10% (depending on loan term) | Monthly amortizations |
SSS Business Development Loan Facility | The lowest of the following:
| Up to 15 years | Prevailing SSS rates | Monthly, quarterly, semi-annual, or annual amortizations |
SSS ASENSO | Maximum of PHP 5 million |
| Prevailing SSS rates | Monthly amortization |
Robinsons Bank Go! Small Biz | Minimum of PHP 500,000 Maximum PHP 20 million | 1-10years | Prevailing Robinsons Bank rates | Monthly amortizations |
DTI also offers loans for start-up businesses in the Philippines.
2. Credit Line

What is a Credit Line?
A credit line is a short-term loan that provides quick access to money on demand. It allows greater financial control, as the interest starts accumulating only when you purchase against the credit line. You pay the interest just on the amount that has been used.
Also known as evergreen loan,[1] a credit line or a line of credit allows you to repeatedly access funds without applying again and again. An evergreen loans lets you pull out money from your fund, make payments, and then pull out some money again.
Is a Credit Line Right for My Business?
A credit line is ideal for short-term, recurring, or working capital financing for the following purposes:
- Purchase of additional supplies, inventory, or both to meet seasonal demand
- Increasing working capital for financing daily business operations
- Accounts receivable financing
- Contract financing[2]
Loan Amount
Small and medium business owners can borrow from PHP 500,000 to PHP 20 million against a line of credit.
Method of Funding
For credit lines, lenders fund the borrowers’ business checking account to the approved loan amount, giving them access to funds through issuing or encashing checks. The BPI Family Ka-Negosyo Loan provides additional ways to access loan proceeds such as ATM withdrawals, EPS (Express Payment System) transactions, and fund transfer via the BPI Online.
Loan Term
Credit lines are valid for one year and can be renewed annually upon the lender’s approval.
Repayment Mode
Paying off a credit line is more flexible than that of a term loan. While the interest is paid in monthly installments, borrowers can repay the principal anytime or as often as they can within the loan term. This makes managing cash flow a lot easier for business owners.
Credit Line Options for Startups in the Philippines
Loan Name | Loan Amount | Loan Term | Interest Rate | Repayment Term |
---|---|---|---|---|
BPI SME Credit Line | Minimum of PHP 300,000 | 1 year, renewable | Prevailing market interest rates | Monthly amortizations |
Metrobank SME Term Loan | PHP 1 million-PHP 20 million | 1 year, renewable yearly (subject to the bank's approval) | “At competitive interest rates” | Interest: Monthly amortizations Principal: Full payment upon promissory note maturity (30-180 days) |
PSBank SME Business Credit Line |
| 1 year, renewable yearly | "At competitive SME Business Credit Line rates" | Minimum amount due (including interest): Every 10th of the month Principal: Payable anytime during the credit line term |
First Circle Revolving Credit Line | PHP 250,000-PHP 5 million | 1 year, renewable | 1.39%-3.49% | Monthly amortizations |
3. Secured Business Loans

What is a Secured Business Loan?
A secured loan for business requires collateral—such as real estate properties and bank deposits—that the lender will claim to recover its losses in case the borrower defaults on the loan.
The collateral reduces the risk for lenders, which is why secured loans generally have lower interest rates, longer loan terms, and higher loan amounts than unsecured loans. These features make a secured business loan affordable and suitable for startup businesses that need funding at a time when they’re just beginning to make profits.
For secured business loans, lenders charge several collateral-related fees such as appraisal fees and collateral registration fees.
With the exception of a few, term loans and credit lines in the Philippines have secured business loans.
Secured Business Loan Options in the Philippines
Secured Business Loan | Collateral |
---|---|
BPI SME Term Loan and SME Credit Line | Real estate mortgage, deposit, or investment |
Metrobank SME Business Loans | Real estate mortgage; Bank deposit or placement |
OWWA Loan (for OFWs) | Real estate property or any loan security accepted by the bank |
PSBank SME Loans | Residential, commercial, or industrial property; Cash deposits |
Security Bank SME Business Mortgage Loan | Residential, commercial, or mixed-use property; Hold-out deposit |
SSS Business Development Loan Facility / SSS ASENSO | Any collateral accepted by the SSS and partner bank |
4. Unsecured Business Loans

What is an Unsecured Business Loan?
As opposed to secured loans, unsecured business loans don’t require collateral and are more difficult to qualify for, especially for those with bad or no credit history. No-collateral business loans come with higher interest rates, shorter loan terms, and lower loan amounts than loans secured by collateral.
Private lenders typically provide unsecured business loans in the Philippines, while only a few major banks have this type of business loan. The big banks tend to focus on collateralized loans and it can be quite a difficult process to get approved for an unsecured business loan with a decent interest rate.

If you find yourself in this situation, consider reputable private businesses such as First Circle, Esquire, or Acudeen. While they have not reached the brand recognition of major banks yet, their processing time is often a lot quicker compared to some banks, and depending on your company’s credit profile, their interest rates are sometimes even cheaper.
Here are some startup business loans without collateral in the Philippines that you may want to consider.
Unsecured Business Loan Options in the Philippines
Unsecured Business Loan | Loan Amount | Loan Term | Interest Rate | Repayment Mode |
---|---|---|---|---|
BPI and DTI collateral-free term loans | Contact BPI for the loan information (Call 02 7918-2000 or email bbclientservices@bpi.com.ph) | Contact BPI for info | Contact BPI for info | Contact BPI for info |
Security Bank SME Business Express Loan | PHP 1 million–PHP 5 million | 12, 18, 24, or 36 months | Monthly add-on rates of 1.4% to 1.85% depending on the loan term | Monthly amortization |
7 Considerations When Choosing a Business Loan in the Philippines
Which startup business loan in the Philippines best fits your financing needs? Consider these seven important factors first.
1. Your Purpose for Borrowing Money

What do you need the money for? Is it for a short-term need like buying inventory and supplies to meet seasonal demand? Or you’re looking to fund a long-term investment like building your shop?
The types of business loans in the Philippines cater to a specific purpose, be it short-term, long-term, or both. Be clear about your goals from the get-go.
Business Loan Purposes
Before applying for a business loan in the Philippines, decide if you’re going to use the funds for:
Business Expansion
The business expansion reflects an entrepreneur’s vision to grow. Banks are more likely to approve most loan applications for purchasing land, a working space, or any form of real estate to accommodate a growing operation.
If you think your business is on the track of growth, then you can apply for any of those available business loans. Just remember that most lenders require your assets as collateral for the loan.
Equipment Purchase
Some business owners borrow money to upgrade or add equipment. Equipment purchase may need a smaller amount of loan compared to business expansion. However, you still need to make a cost-benefit analysis[3] to determine whether it’s more practical to buy a new tool or to lease it for the long term.
Increase Working Capital
A term loan is usually one of the best options if you’re looking at increasing your money for day-to-day operations. Some business owners apply for a business loan in the Philippines until their profits and sales reach a certain volume.
Take note that business loans for working capital are considered riskier than loans for business expansion. This may result in higher interest charges depending on your negotiation with the lender.
Improve Marketing Strategy
Marketing strategies can make or break a business, and entrepreneurs need to adopt new techniques to improve their visibility and credibility among potential customers. Take out a business loan in the Philippines to invest in employee training, software, new staff, and technology.
Get Additional Funding for Your Business and be Rewarded!
Future-proof your dream of building your own business with the low-interest, fast approval Citi Personal Loan. If you apply online through Moneymax until May 31, 2022 (and get approved subsequently), you’ll receive a welcome gift worth up to ₱17,490.
Click on the image below to know more about the Moneymax Citi Personal Loan Promo. Apply now!

2. Loan Amount
Next, determine how much you need to borrow for your business. Loanable amounts vary according to the type of loan and the lender.
For example, secured business loans for startups typically have higher loan amounts than unsecured loans. The higher the value of your collateral, the better your chances of qualifying for a higher loan amount. Also, most banks lend higher amounts to entrepreneurs than government agencies and private lenders in the Philippines.
Determining your loan amount is crucial because this comes with interest and repayment depending on the sales and revenues of your business. Before deciding on the final loan amount, you can check your balance sheets to know how many monthly amortizations your business can cover.
3. Method of Funding

How do you prefer to access your funds? Do you want to receive the loan proceeds as a one-time lump-sum amount? Or you’d rather access the money only when you need it? Business loan types largely differ in the way the loan proceeds are released to the borrower.
4. Loan Term
How long can you realistically pay the business loan? Can you pay it off within a year? Or you need a longer time to complete your loan repayments?
The loan tenor can either shorten or prolong your agony of making monthly repayments. Again, deciding on the loan to be paid in one year or 10 years depends on the status of your business.
Short-Term Loans vs Long-Term Loans Comparison
Features | Short-Term Loans | Long-Term Loans |
---|---|---|
Repayment | 1 year | Up to 10 years |
Eligibility requirements | Basic loan requirements to be fulfilled by the borrower | Most qualified buyers are more eligible for long-term loans because lenders are faced with higher risks when extending loans for a longer period |
Loan amount | Smaller amount since the loan is payable for a shorter period | Bigger loan amounts are offered to long-term borrowers depending on the lenders' loan cap for their bank products |
Interest rates | Higher and less flexible interest rates | Flexible and lower interest rates |
Monthly amortization | Higher monthly amortization | Lower monthly amortization since the loan amount is stretched within a longer period |
5. Repayment Mode
What mode of loan payment will work better for you: fixed or flexible monthly payments? The right choice depends on the cash flow of your business.
Fixed-Rate Loans vs Variable-Rate Loans
Features | Fixed-Rate Loans | Variable- Rate Loans |
---|---|---|
Interest rates | Same interest rates for the entire loan duration | Vary for the entire loan term depending on the benchmark interest rate that changes periodically |
Payments | Same amortization all throughout the loan duration | May change depending on the prevailing interest rate |
Impact | The borrower will not benefit from a declining interest market | The borrower will have to pay more if the interest market increases |
Suitable for | Both short-term and long-term borrowers who want predictable monthly loan payments | Short-term borrowers who want to take the opportunity of paying less when the market declines |
6. Collateral
Do you have a valuable asset you’re willing to put up as collateral for a secured business loan? If so, the amount you can borrow will depend on the appraised value of your collateral. Borrowing money through secured loans using your properties and assets as collateral can be both advantageous and disadvantageous to you.
Advantages of Borrowing Money with Collateral
- Increases your chances of approval – Having collateral improves your eligibility for a business loan for startups in the Philippines. If you have a low credit score or if you haven’t borrowed before, then the collateral is enough to guarantee your loan repayment.
- Gives you the chance to explore more lenders – With an on-hand asset to offer, you have the chance to apply with different types of lenders and choose the best loan offer. If you don’t have collateral, you might settle for the lender that approves your credentials even if the interest rates are high and the loan terms are not convenient for you.
- You can get lower interest rates – A piece of property reduces the loan risk for the lender. Thus, there is a reason to reduce the interest rates of the loan.
Disadvantages of Borrowing Money without Collateral
- Your options are limited. Again, without an asset to guarantee a loan, you might just settle with lenders that approve your loan application even when the loan terms are not easy.
- The interest rates are potentially high. Unsecured loans usually come with hefty charges and high interest rates because there’s no guarantee that the loan can be paid off.
- The loan amount can be low. Most of the time, the maximum loan amount is up to 80% of the property value. Unsecured personal loans for startups in the Philippines might provide lower loan amounts because of the higher risk.
7. Interest Rate
Of course, you want to get the best business loan at the lowest rate possible. But it can be quite tricky because interest rates vary according to the lender’s prevailing rate, loan term, and type of loan. For instance, lenders charge higher interest rates on unsecured business loans than secured loans.
Knowing the difference between effective interest rates and APR will give you a visible benchmark when comparing loans. Lenders usually just advertise the interest rate of a loan but may not reveal the APR, which is the true cost of the loan that includes everything charged against you.
Effective Interest Rates vs Annual Percentage Rates
Features | Effective Interest Rate | Annual Percentage Rate |
---|---|---|
What it is | The cost of the loan | The cost of the loan and all other fees included with the loan |
Factors to determine the rate | Borrower's credit score, debt-to-income ratio, and income stream | Interest rates, fees, penalties, and other factors that may either decrease or increase the loan cost |
Final Thoughts
After you’ve considered all factors when choosing a business loan in the Philippines, take a look at each type of loan. As an entrepreneur launching a startup in the Philippines, you have four choices: term loans vs. credit lines and secured vs. unsecured loans. Use this guide to help you find the best business loan for you.
Money is a serious matter when it comes to running a business of any size, startups included. Do your research to determine the suitable type of business loan in the Philippines for your business needs. Spare yourself the trouble by using a free online comparison tool that can help speed up your search for the right loan for funding your business.
Compare Other Loan Options
Below is a list of trusted personal loan companies and their loan features. Compare your options and apply through Moneymax!
Sources:
- [1] Evergreen Loan Definition (Investopedia, 2021)
- [2] Can Contract Financing Work for Your Small Business? (Kassar, 2014)
- [3] Selecting a loan and doing a cost benefit analysis (Loan Market)
Venus is the Head of Editorial Content at Moneymax, with 15+ years of experience in digital marketing, corporate communications, PR, and journalism. She invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Outside of work, she’s crazy about cats and Korean dramas. Follow Venus on LinkedIn.