Running a business in Cebu and facing cash flow issues? Rent is due, suppliers are waiting, and you lack the collateral for traditional loans. High-interest rates are also a concern.
No-collateral loans offer a flexible solution, providing the funds you need without risking assets.
In the Philippines, micro, small, and medium enterprises (MSMEs) make up 99.6% of all businesses and account for 66.97% of the country’s total employment as of 2023. This makes accessible financing even more crucial for the success of these businesses.
In this article, we’ll simplify no-collateral and low-interest loan options in Cebu, helping you make an informed decision based on your needs.
TL;DR
- No-collateral loans in Cebu are unsecured loans that don’t require assets, such as property or vehicles, as collateral.
- Approval for these loans relies heavily on credit score, income proof, and employment stability.
- Interest rates range from 1.09% to 2% monthly, with flexible repayment terms from 6 to 36 months.
- Lenders in Cebu include traditional banks such as PNB, digital platforms like UNO Digital Bank, and alternative options like n90, offering varying loan amounts and interest rates.
What Are No-Collateral Loans?
No-collateral loans, also known as unsecured loans, are types of loans that do not require borrowers to pledge assets, such as property or vehicles, as collateral.
These loans are particularly beneficial for individuals without significant assets, as they offer access to funds based on their creditworthiness and financial capability.
Due to the lender's lack of security, these loans often come with stricter approval criteria and higher interest rates.
- Type: Personal loans, business loans, salary loans, microfinance loans
- Security: None required
- Risk: Higher for lenders, leading to stringent eligibility checks
- Loan Amount: Personal loans typically up to ₱1 million; business loans can exceed this limit depending on the lender
- Term: Generally shorter, between 12 to 36 months
Also Read: Exploring the Types of Collateral for Secured Loans: A Complete Guide
Now that we know what no-collateral loans are, let’s look at the key factors lenders consider when approving these loans.
Approval Criteria for No-Collateral Loans
Approval for no-collateral loans heavily relies on the borrower’s credit profile, financial history, and income stability. Since there are no assets to back up the loan, lenders focus on assessing the borrower’s ability to repay.
This includes reviewing their credit score, current debts, income, and employment history.
- Credit Score: A higher score increases the likelihood of approval and better rates
- Income Proof: Payslips, ITR (income tax returns), or business financial statements are typically required
- Employment or Business Stability: Lenders look for stable income, usually requiring a minimum of six months to a year in the same job or business
- Debt-to-Income Ratio: Ideally, this should be under 40% to ensure the borrower can handle the loan repayment
Next, let's explore the various lenders in Cebu offering no-collateral loans and what they have to offer
Top Lenders in Cebu Offering No-Collateral Loans
Various financial institutions in Cebu provide no-collateral loans, each with distinct offerings tailored to different borrower needs.
1. n90
- Loan Amount: Up to PHP 25 million, depending on the business's annual revenue.
- Interest Rate: Monthly interest rates between 1.09% and 1.90%, depending on the business’s revenue.
- Repayment Terms: Flexible, based on the loan product chosen (bridge loans, small business loans, or invoice factoring).
- Fees: Transparent terms with no hidden costs; processing fees may vary depending on the loan amount and type.
2. Security Bank / SB Finance
- Loan Amount: PHP 30,000 to PHP 3 million.
- Interest Rate: Monthly add-on rate of 2%, with an estimated APR of 39.43%.
- Repayment Terms: 12 to 36 months.
- Fees: Processing fee of PHP 5,000; notarial fee of PHP 300 for loans of PHP 100,000 and above.
3. Philippine National Bank (PNB)
- Loan Amount: Up to PHP 2 million.
- Interest Rate: Monthly add-on rate of 1.5%, with an estimated APR(Annual Percentage Rate) of 18%.
- Repayment Terms: 3 to 60 months.
- Fees: PHP 2,000 processing fee; documentary stamp tax applies.
4. UNO Digital Bank
- Loan Amount: PHP 10,000 to PHP 200,000.
- Interest Rate: Monthly add-on rate of 2%, with an estimated APR of 24%.
- Repayment Terms: 6 to 36 months.
- Fees: Processing fee of PHP 500 or 3% of the loan amount, whichever is higher.
5. Digido
- Loan Amount: PHP 1,000 to PHP 25,000.
- Interest Rate: First-time borrowers may avail 0% interest for 7 days; repeat borrowers are subject to a daily interest rate of 1.5%.
- Repayment Terms: 5 to 30 days.
- Fees: No processing fees; late payment fees may apply.
6. Balikbayad
- Loan Amount: Up to PHP 100,000.
- Interest Rate: Annual percentage rate (APR) of 69%.
- Repayment Terms: Flexible terms tailored to the borrower's needs.
- Fees: No deductions from the approved loan amount; no hidden processing fees.
7. 1 2 3 Finance
- Loan Amount: Up to PHP 50,000.
- Interest Rate: APR of 59.86%.
- Repayment Terms: Flexible terms based on the borrower's profile.
- Fees: No processing fees; no deductions from the loan amount.
8. BPI
- Loan Amount: Up to PHP 3 million (up to 3 times your monthly income).
- Interest Rate: Competitive rates based on the borrower’s profile.
- Repayment Terms: Flexible repayment options with terms of 12, 18, 24, 30, or 36 months.
- Loan Purpose: Can be used for various personal needs such as medical expenses, home improvements, or debt consolidation.
Also Read: Best Unsecured Loan Options for Startups In the Philippines
It’s also important to understand the costs involved, so let’s examine the interest rates and fees commonly associated with no-collateral loans.
Interest Rates and Fees Associated with No-Collateral Loans in Cebu
Interest rates for no-collateral loans in Cebu vary depending on the lender, loan amount, and repayment terms. It's essential to consider both the interest rates and associated fees when evaluating loan options.
- Interest Rates: Monthly add-on rates typically range from 1.25% to 2%, leading to APRs between 15% and 39%.
- Processing Fees: Generally range from PHP 500 to PHP 5,000.
- Late Payment Fees: Can be up to 5% of the unpaid instalment or a flat fee of PHP 500, depending on the lender.
To help you get prepared, let’s review the typical eligibility requirements and documents you’ll need when applying for a no-collateral loan.
Eligibility and Documentation Required for No-Collateral Loans
Individual lenders in Cebu set their eligibility criteria for no-collateral loans, which may vary. Typical requirements include age, income, employment status, and credit history.
Basic Criteria:
- Age: 21 to 65 years old
- Citizenship: Filipino
- Minimum Monthly Income: Around PHP 12,000 (Cebu) to PHP 15,000 (Metro Manila)
Documents:
- Personal Loans: Government-issued ID, proof of income (payslip, ITR)
- Business Loans: Mayor’s Permit, DTI/SEC registration, financial statements
- OFW Loans: POEA contract, OEC, co-borrower details
Now, let’s walk through the simplified process for applying for no-collateral loans in Cebu, so you know what to expect.
How to Apply for No-Collateral Loans in Cebu
The application process for no-collateral loans in Cebu has become more streamlined, with many lenders offering online applications. However, applicants should be prepared to provide necessary documentation.
- Online Applications: Many lenders, such as UNO Digital Bank and Digido, offer fully online application processes.
- Documentation: Commonly required documents include government-issued IDs, proof of income, and proof of residence.
- Approval Time: Approval times vary; some lenders may approve loans within a few hours, while others may take several days.
Next, let’s discuss how you can use the funds from no-collateral loans and the potential restrictions placed on certain loan types.
Loan Purpose and Use Cases
Loan proceeds can be used for both personal and business purposes, subject to the lender's discretion.
- Common Uses: Medical, tuition, debt consolidation, travel, emergencies
- Business Capital: Inventory, payroll, expansion
- Others: Rental deposit, utilities, appliance purchase
Restrictions:
- First-time applicants may get lower caps
- Purpose declarations may be required for large loans
To make an informed decision, let’s break down the advantages and risks of choosing no-collateral loans for your business in Cebu.
Advantages and Risks of No-Collateral and Low-Interest Loans in Cebu
While no-collateral loans offer several advantages, they also carry potential risks that borrowers should carefully consider.
Now that you have a better understanding of loan options, let’s take a closer look at why n90 is a preferred choice for SMEs in Cebu.
Why Do SMEs in Cebu Choose n90?
SMEs in Cebu face challenges in securing loans, banks are slow, fintech lenders lack clarity, and informal lenders come with high risks. n90 offers quick, flexible loans with clear terms, tailored to your business needs.
- Flexible Loan Amounts: From ₱1.5M to ₱25M, based on your business’s annual revenue.
- Clear, Transparent Terms: Monthly interest rates starting at 1.09%, with no hidden fees.
- Quick, Hassle-Free Process: Minimal paperwork, fast approvals, and timely fund disbursement.
- Revenue-Based Lending: Loan offers align with your revenue, not just your documents.
- Built-in Support: Access to financial coaches for guidance throughout the process.
n90’s Lending Options
- Bridge Loans: Short-term funding for immediate needs or opportunities.
- Small Business Loans: Flexible working capital for expansion or daily operations.
- Invoice Factoring: Convert Unpaid Invoices into Instant Working Capital.
With n90, SMEs in Cebu can access quick, flexible financing that helps them grow without the red tape.
Final Thoughts
Choosing the right no-collateral and low-interest loan is a crucial decision for any business in Cebu. It can provide the financial flexibility needed to overcome challenges, scale operations, or capitalise on new opportunities.
With numerous options available, it’s essential to understand the terms and choose a lender that suits your needs.
n90 offers a solution designed specifically for SMEs, providing fast approval, clear terms, and loans tailored to your business's unique financial situation.
Apply now or call +63 962 663 1393 to speak with an n90 lending expert and learn how we can help you secure the financing you need to move forward.
FAQs
Q: What are the main differences between no-collateral loans and secured loans?
A: No-collateral loans don’t require assets like property or vehicles as security, making them more accessible for individuals and businesses without significant assets. In contrast, secured loans require collateral, often resulting in lower interest rates due to reduced lender risk.
Q: How does my credit score affect my chances of getting approved for a no-collateral loan?
A: Your credit score plays a significant role in determining approval for a no-collateral loan. A higher score improves your chances of approval and may result in better loan terms, such as lower interest rates or higher loan amounts.
Q: Can I apply for a no-collateral loan as an OFW (Overseas Filipino Worker)?
A: Yes, many lenders offer specialized loans for OFWs, often requiring documents like an OEC (Overseas Employment Certificate) and a co-borrower in the Philippines. These loans are designed to accommodate the financial needs of individuals working abroad.
Q: Are there any restrictions on how I can use the funds from a no-collateral loan?
A: While no-collateral loans offer flexible usage, some lenders may require borrowers to declare the intended purpose of the loan, particularly for larger amounts. Common uses include medical bills, tuition, business capital, or debt consolidation.
Q: What should I do if I can’t make a payment on my no-collateral loan?
A: If you anticipate difficulty in making a payment, it’s crucial to communicate with your lender early. Many lenders offer restructuring options or alternative repayment plans to help you manage the loan without falling into default.
