Business loans are crucial for entrepreneurs as they provide the necessary capital to start, grow, or sustain a business, especially when revenue is not yet sufficient. They help manage cash flow, ensuring that businesses can cover day-to-day expenses, and invest in opportunities without financial strain. With additional funds from loans, businesses can expand operations, open new locations, or invest in marketing and new products.
Securing a business loan in the Philippines requires understanding your financial needs, and matching them with the right lending options. Assess how much capital you need, the collateral you can offer, and choose from various lenders like banks, online lenders, or government programs such as SB Corp.
Types of loan/financing for your business
Corporate credit card
A corporate business card is a valuable tool for managing expenses, building credit, and streamlining financial processes. Corporate cards offer spending limits and controls to manage employee expenses, and prevent overspending. They also provide transparency by allowing you to track individual employee spending, enhancing accountability.
Government MSME Financing Programs
The MSME Financing Programs by the Small Business Corporation (SB Corp) aim to support micro, small, and medium enterprises (MSMEs) currently underserved by the banking system.
Banks/Financing Companies
Getting a business loan from a bank or financing institution can be a crucial step in growing your business. Different banks and financing institutions are able to provide loan solutions that would best fit your needs.
In the Philippines, the general requirements for a business loan typically include several key documents and criteria:
- Proof of Identity: Valid government-issued IDs such as a passport, driver’s license, or UMID are required to satisfy the Know Your Client (KYC) protocol
- Business Legitimacy: Documents proving the legitimacy of your business, such as a Mayor’s Permit, DTI or SEC registration, and BIR Certificate of Registration
- Financial Capacity: Latest financial statements, bank statements, and income tax returns to demonstrate your business’s financial health
- Profitability: Evidence of profitable business operations, typically for at least three years
- Good Credit Standing: A good credit history is often required to ensure the ability to repay the loan
How to Improve Your Chances for a Business Loan Approval How to Improve Your Chances of Getting a Business Loan Approved
Showcase Financial Stability
This includes showing your company’s existing or projected profitability, displaying a positive cash flow to demonstrate your ability to repay the loan, and highlighting any important assets it owns. These variables reflect your company’s financial health and ability to satisfy its loan obligations.
Build a Relationship with Your Lender
Building a positive relationship with your financial institution might be helpful. They can provide guidance, and may be more ready to grant your loan if they know you and your company. Clearly communicate your business’ current situation, specific needs, and detailed plans for utilizing the loan.
Choose the Right Loan Type to Match Loan to Needs:
Make sure the loan you choose fits your demands and your resources. A few things to think about are the collateral requirements, loan amount, payback duration, and customer service provided by the lender. Make sure the loan supports your business objectives, and is in line with your ability to achieve these conditions.
Step by step application process for your business loan:
- Check Eligibility: Ensure you meet the eligibility criteria:
- Must be a Filipino citizen
- Age is between 21 and 65 years old
- For employed applicants: Minimum monthly income of PHP 15,000 (Metro Manila) or PHP 12,000 (outside Metro Manila)
- For self-employed applicants: Must own at least 40% of the business, which should be operating profitably for at least 2 years
- Prepare Required Documents: Gather the necessary documents
- Employed
- Income documents, any of the following:
- Latest Certificate of Employment and Compensation issued within last two (2) months
- Photocopy of latest Income Tax Return (ITR)/BIR Form No. 2316
- Latest one (1) month payslip issued within the last month
- Self-Employed/Professionals
- Latest one (1) year Audited Financial Statements (AFS) with at least the previous year’s comparative financials, or;
- Latest three (3) months bank statements
- SEC/DTI Certificate of Registration
- Business permit/Mayor’s permit
- Latest GIS (if corporation)
- List of three (3) trade references with contact details
- At least 1 supplier and 1 customer
- Employed
- Complete the Application: You can apply online via the SB Finance website, the zukì mobile app, or by visiting any Security Bank branch.
- Wait for Processing: SB Finance will review your application, and may contact you for additional information or clarification.
- Approval and Disbursement: If approved, you will receive the loan agreement. Once signed, the funds will be disbursed to your account.
FAQ
Can a new business get a loan?
Yes, new businesses can often obtain loans, especially if they have a solid business plan, and can demonstrate potential profitability. However, it’s important to note that lenders may have specific requirements for new businesses.
Having additional sources of income can significantly improve your chances of securing a loan.
How can I qualify for a business loan?
Qualifying for a business loan typically involves meeting certain requirements set by the lender, such as having a good credit score, a solid business plan, and demonstrating financial stability. Lenders will also look at your business’ cash flow and profitability.
What are the typical interest rates and fees?
Interest rates and fees can vary widely based on the lender, your credit score, and the type of loan. It’s important to compare offers from multiple lenders to find the best rates and terms
Do I need collateral to secure a business loan?
Some business loans require collateral, such as property or equipment, while others do not. Unsecured loans typically have higher interest rates.
What can I use a business loan for?
Business loans can be used for a variety of purposes, including purchasing inventory, expanding operations, hiring staff, and covering day-to-day operational expenses.
Summary
Business loans are essential for entrepreneurs in the Philippines, providing the necessary capital to start, grow, or sustain a business. By carefully assessing your financial needs, and exploring various lending options, you can secure a loan that aligns with your business goals.
Assess how much capital you need, the collateral you can offer, and choose from various lenders like banks, online lenders, or government programs such as SB Corp. Additionally, consider exploring SB Finance, which offers a range of loan products tailored to meet specific business needs. By carefully preparing and selecting the appropriate financing solution, businesses can achieve their growth and operational goals effectively.
If you need help with your loan application, reach us via email ([email protected]), our Customer Service hotline at (+632) 8887-9188, or Facebook Page (@SBFinancePH).
If you want an SB Finance Goal Consultant to guide you toward achieving your financial goal, simply answer this form, and we’ll be sure to reach out to you!
Your right choice makes all the difference.