MSME Financing: Where to Apply for a Business Loan in the Philippines

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Micro, small and medium enterprises (MSMEs) are important drivers of the Philippine economy. According to the Asian Development Bank (ADB) Institute, MSMEs accounted for 99.5% of all enterprises in the country and employed 63.2% of the labor force in 2018. Although they are considered the backbone of the national economy, most MSMEs still remain vulnerable to financial challenges and changes in the business environment. 

This was proven further when the COVID-19 pandemic hit the country and MSMEs were among the most impacted sectors. While a significant number of small enterprises have recovered, it is still evident that funding is most essential for MSMEs to thrive and succeed. 

Available Loans for MSMEs 

Here in the Philippines, MSMEs can get funding support from banks, the government, and even private lenders. The most common types of loan offered to entrepreneurs are Business Loans and Personal Loans

A business loan is intended for funding business needs such as store expansion, purchase of additional machinery or equipment, and paying for operational expenses. Meanwhile, a personal loan is a type of consumer loan that can also be used for funding your business. 

Types of Business Loans

Most local banks provide business loans, which can be categorized into four types: 

  • Term Loans: mostly used as additional fixed capital for an existing business
  • Credit Line: most suitable for short-term business needs
  • Secured Business Loan: lower interest rates, higher loan amounts, and longer payment terms, but with required collateral
  • Unsecured Business Loan: where the borrower is not required to present any collateral

How can MSMEs apply for a loan?

When applying for a loan, you shouldn’t only focus on finding lower interest rates. You also need to consider the requirements needed, loan amounts, and repayment terms. 

Here is a list of major banks in the Philippines that offer loans for MSMEs:

(NOTE: All provided pieces of information were collated from the agencies’ websites. If you need more details about the loans, feel free to visit your bank’s nearest branch or contact them directly via hotline or social media pages.) 

Here are the government agencies that offer loans for MSMEs:

(NOTE: All provided pieces of information were collated from the banks’ websites. If you need more details about the loans, feel free to visit your bank’s nearest branch or contact them directly via hotline or social media pages.) 

Small Business Loans FAQs

How do I qualify for a business loan in the Philippines?

The eligibility requirements for loans vary per bank and government agency. But most of these financial institutions typically require the following: 

  • Must be a Filipino citizen
  • Aged 21 upon loan application but not older than 65 upon loan maturity
  • SEC-registered or DTI-registered business with at least three (3) years of profitable business operations
  • With good credit standing
  • Must meet a minimum gross annual income/sales 

Document requirements also vary but these are the basic requirements that you should prepare: 

  • Duly accomplished application form
  • Valid government-issued ID
  • Proof of business billing address
  • DTI or SEC Certificate
  • BIR Certificate of Registration
  • Photocopy of audited financial statements
  • Company profile/ Business background 

Which loan is best for small businesses?

Business loans are still a preferred option to most entrepreneurs because as the name suggests, it is primarily intended for funding businesses. Business loans are offered to borrowers who want to start a business, expand their business, or use the fund for other business-related expenses. Most banks offer different types of business loans, and some also have business loan packages that would be suitable for your needs. 

Can I get a business loan without revenue?

As mentioned above, business loans are also offered to borrowers who have yet to start their business operations and need capital. You can get funding support in advance through a business loan. Just keep in mind that before lenders approve your loan application, they will need to assess first your capacity to repay the loan. Your credit history, source/s of income, and the viability of your business are just some of the factors that would be considered in the process.

Applying for a loan is a more viable option than spending your own money or borrowing from family or friends. You can use your savings for emergencies and other important matters and use the loan money specifically for your business needs. 

To know which loan works best for you, try exploring different loan options from different banks and government agencies. It would also be best to talk to your fellow entrepreneurs about their preferred loan option and compare which loan offers lower interest rates and softer payment terms. 

Joining a community would also be helpful as it can link you to other MSMEs who you can share ideas and insights with. Facebook communities such as Small Business Network (SBN) Philippines have been created to support Filipino entrepreneurs in achieving their goals.

Join our FREE online community and connect, collaborate, and learn with other Filipino business owners.

Nenette Dizon
Nenette Dizon is a professional writer whose works focus on PR and SEO content creation. She graduated with a degree in Journalism from the University of Santo Tomas.

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