How to Secure Medium Business Loans in the Philippines
Introduction
If you are looking to secure a medium-sized business loan in the Philippines, there are a few things you need to know.
First, you will need to have a good credit history and provide documentation of your business' financials. You will also need to be prepared to make a down payment and sign a contract agreeing to specific terms and conditions.
If you meet all the requirements, it is possible to secure a medium-sized business loan from a bank or private lender in the Philippines. The amount of money you can borrow will depend on your business' financial history and credit score, as well as the lender's risk tolerance.
It is important to shop around for the best interest rates and terms, and to make sure you are fully aware of what you are signing up for. By following the advice in this article, you will be able to secure the business loan you need to take your business to the next level.
Understanding Business Loans in the Philippines
When looking for a small business loan, you have several options.
There are a number of lending institutions in the Philippines that offer small business loans. These loans are usually unsecured, meaning that you do not need to provide any collateral. However, these loans are also usually very small, usually no more than Php200,000.
If you need a larger loan amount, you can try to get a loan from a commercial bank. These banks usually require collateral, and they will also check your credit history to see if you are a good risk. If you have a poor credit history or if your company does not have a lot of cash flow, you may not be approved for a loan.
There are also a number of microfinance institutions in the Philippines that offer small business loans. These institutions are willing to work with borrowers who have poor credit or who do not have a lot of collateral. However, the loan amounts they offer are usually quite small.
Small, Medium and Large Enterprise Classification in the Philippines
According to the Department of Trade and Industry (DTI):
The Philippines employs two criteria in operationally defining MSMEs, namely employment and asset size.
Small Enterprises
10-99 employees
Php 3,000,001–15,000,000 asset size
Medium Enterprises
100-199 employees
Php 15,000,0001–100,000,000 asset size
Large Enterprises
200 or more employees
Php 100,000,001 and above asset size
The Requirements for Securing a Small Business Corporation Loan
In order raise your chances of securing a small business corporation loan in the Philippines, you will need to provide a valid Government-Issued ID and know business financial rating score through SEC-accredited Credit Rating Agency like CreditBPO. In addition, your business must meet SME size standards and be for-profit. You must also have a good credit history in order to be approved for a loan. Lastly, a personal guarantee is often required in order to guarantee the loan.
Types of Medium Business Loans in the Philippines
If you're a small or medium business owner in the Philippines, you may be eligible for a loan from the LANDBANK Franchising Lending Program. This program provides credit assistance to qualified franchisees, and offers loans ranging from ₱500,000 to ₱20 million.
There are five main types of business loans available through the LANDBANK Franchising Lending Program: the secured loan, business loan, term loan, SME loans, and business line of credit. Each of these loans has its own terms and conditions, so be sure to read the fine print before applying.
Factors to Consider Before Applying for a Medium Business Loan
Poor credit history and limited cash flow could impede the loan approval process. To ensure a smooth and successful application, business owners need to create a solid business plan, be organized, and seek expert advice. Additionally, it is important to accurately estimate the optimal loan amount and develop a realistic repayment plan.
Having this information readily available will make it much easier for lenders to approve your loan request. Without it, you risk your application being denied and you will have wasted valuable time and resources.
Where to Find Reliable Sources of Financing
With so many sources of financing available, it can be overwhelming to figure out where to start. Fortunately, there are 18 types of business financing available in the Philippines. Among these are personal investments, venture capital, and SME-guaranteed loans made through banks and credit unions. These sources of capital can provide the resources needed to help you launch your business or cover operations expenses. All of them come with terms and interest rates that could be different from one another, so it's important to do your research and find the loan package that will work best for you.
FAQs on Securing Medium Business Loans in the Philippines
Securing a medium business loan in the Philippines can be difficult, especially if you have a poor credit history or limited collateral. Consider your options carefully and compare the various loan products to get the best terms. You also need to provide collateral if you want to secure a loan more easily. Make sure to check all interest rates, repayment schedules, and other fees before signing up for any loan. If you have any questions about the process, reach out to experienced lenders or financial advisors for help.
Conclusion
In order to secure a medium business loan, it is important that you first understand the requirements set by the lending institution. As a business owner, you will also need to have a good credit history and present a sound business plan to the lender. By following these tips, you will be able to get the loan you need to help your business grow.
