Alternative lending in the Philippines is experiencing a surge, with a projected compound annual growth rate (CAGR) of 17.4% from 2024 to 2028.
The market, valued at $392.6 million in 2023, is expected to nearly triple in size, reaching $936.6 million by 2028. This rapid growth reflects the increasing demand for more accessible and flexible lending options, especially from non-bank providers that cater to small and medium-sized businesses.
In this evolving market, business loans have become a vital tool for SME entrepreneurs seeking financial support. A business loan is a type of financing that enables businesses to meet various needs, including operational expenses and growth opportunities. With more lending options available, companies now have the chance to secure the funding they need with terms that suit their unique situations.
In this blog, we’ll walk you through how business loans can work for your company’s finances, the types of loans available, and how to qualify for them.
What is a Business Loan?
A business loan is money borrowed by a company to cover essential expenses, like daily operations, equipment upgrades, or business expansion. It provides quick access to funds, which are repaid over time with interest through fixed or flexible terms.
In the Philippines, these loans are available through banks, private lenders, and government agencies. Loan terms depend on your business size, revenue, and credit profile, allowing you to act on growth opportunities without depleting your existing resources.
Types of Business Loans in the Philippines
Businesses in the Philippines have access to a range of loan options tailored to meet various financial needs. Understanding these options can help entrepreneurs select the best financing solution for their business objectives. Here’s an overview of some of the most common types of business loans available.
1. Term Loans
Term loans are traditional loans in which businesses receive a lump sum amount that they repay over a set period, along with interest. These loans are often used for significant investments, such as expanding operations, purchasing equipment, or acquiring real estate. The repayment terms are typically fixed, making it easier for businesses to plan their cash flow over time.
2. Revolving Credit Lines
Similar to credit cards, revolving credit lines offer businesses a flexible borrowing option. Companies can borrow up to a specific limit, repay the amount, and borrow again as needed. This type of loan is ideal for managing cash flow fluctuations and covering short-term expenses, such as purchasing inventory or handling unexpected costs. It provides businesses with quick access to funds when required.
3. Microfinance Loans
Microfinance loans are designed for small businesses or entrepreneurs who may not meet the eligibility requirements for traditional bank loans. Offered by microfinance institutions, these loans typically involve smaller amounts with more flexible terms, making them an excellent option for new or smaller businesses that need financial support to get started or grow.
4. Government-Backed Loans
Government-backed loans are offered by agencies such as the Small Business Corporation (SB Corp) and the Department of Trade and Industry (DTI). These loans often come with lower interest rates and more favorable repayment terms to support small and medium-sized enterprises (SMEs). These loans aim to promote economic growth by making capital more accessible to businesses that need it.
5. Invoice Financing
Invoice financing allows businesses to borrow against their outstanding invoices. It provides immediate cash flow based on unpaid customer invoices, helping SME businesses manage their day-to-day operations while waiting for clients to settle their accounts. This option is beneficial for businesses that deal with extended payment terms or need working capital without waiting for customer payments.
6. Equipment Financing
Equipment financing is a type of loan specifically designed for purchasing business equipment, including machinery, technology, and other related assets. The equipment itself serves as collateral for the loan, thereby reducing the need for businesses to provide additional assets. This loan enables businesses to acquire essential tools without the burden of large upfront costs, allowing for manageable payments over time.
Choosing the right loan option depends on your business goals, whether it’s for expansion, managing cash flow, or upgrading equipment. Understanding these options helps you make informed decisions on how to best support your business's financial needs and growth.
Are you unsure which loan best suits your needs? Contact n90, and our team will help you choose the right option for your business.
How Business Loans Support Company Finances?
A business loan isn't just about getting cash. It’s about giving your company room to breathe, move, and grow. Whether you're running a small café, a retail store, or a growing logistics firm, the right loan can help you take control of your finances and future.
Here’s how business loans can help your business.
Manage Day-to-Day Cash Flow
Every business has its ups and downs, whether it's during the off-season or while waiting for client payments. A business loan helps cover essential costs like staff salaries, inventory, and utilities so your business stays on track, no matter what.
Fuel Growth and Expansion
If you're considering expansion, such as opening a second location or launching a new product line, a loan can help fund those plans without depleting your existing resources. It’s the perfect way to scale without risking your financial stability.
With n90, you can get funded fast, up to ₱25 million, based on your revenue, not just your credit score. Apply now to expand your business!
Upgrade Tools and Technology
Outdated equipment can hinder your business's progress. With a business loan, you can invest in the tools and technology you need to improve efficiency and grow your profits, whether it’s upgrading your bakery’s ovens or adding new machinery to your production line.
Seize New Opportunities
Opportunities don’t always come at the right time. Whether it’s a supplier discount or a bulk order you can’t pass up, a business loan gives you the cash flow you need to act quickly and get ahead of the competition.
A business loan can provide the monetary stability and flexibility your business needs to adapt and grow in an ever-changing market. Hence, it is essential to understand the key qualifications lenders look for when assessing your business, ensuring you are well-prepared for the application process.
How do You Qualify for a Business Loan?
Securing a business loan can be a challenging process, particularly for businesses that fail to meet the necessary criteria. In the Philippines, a significant percentage of loan applications are rejected due to factors like insufficient credit history, low cash flow, or unclear business plans.
Understanding what lenders look for can increase your chances of approval, help you avoid setbacks, and give your business the financial boost it needs. Here's what you need to know to qualify.
- Submit the Required Documents: Lenders will request valid identification, your business registration or permits, and proof of income. These verify your identity, prove your business is legitimate, and show that it generates revenue.
- Maintain a Good Credit Record: A strong credit history indicates that you manage your finances effectively and pay off debts on time. This builds trust with lenders and improves your chances of approval.
- Present a Clear Business Plan: Lenders want to know how you plan to use the loan and how you’ll repay it. A clear, realistic plan adds credibility and shows that you’re serious about growing your business.
Preparing these in advance not only speeds up the application process but also improves your chances of approval. The next important step is understanding where to apply, as different types of lenders offer varying terms, processes, and requirements.
Common Lender Types for Business Loans
When applying for a business loan, the type of lender you choose can affect your loan amount, interest rate, approval time, and overall experience. Having the proper knowledge of your options can help you make informed decisions that meet your business needs.
Here are some common types of lenders.
1. Traditional Banks
Banks offer competitive interest rates and higher loan amounts, making them a good choice for established businesses with strong financials. However, the process can be slow, with stricter requirements and more paperwork. Be prepared for a detailed review of your business records and credit history.
2. Government Institutions
Agencies like the Small Business Corporation (SB Corp) provide loan programs specifically for SMEs. These loans often come with favorable terms and lower interest rates. The downside is limited funding availability and tighter qualification criteria, especially during periods of high demand.
3. Private Lending Companies
Private lenders offer faster approvals and more flexible requirements, which can be helpful for smaller or newer businesses. They’re often more open to businesses that may not meet strict bank criteria. However, this convenience may come at the cost of higher interest rates or shorter repayment terms.
Each lender type has its pros and cons. Consider your business size, the speed at which you need the funds, and how well you meet the lender's requirements before choosing the one that best fits your needs.
Why Choose n90 for Your Business Loan?
Financing your business is not just about the money. It’s about who you’re borrowing from. n90 takes a relationship-first approach, giving you more than just capital. You receive support, flexibility, and complete transparency throughout the entire process. Whether you're covering short-term needs or fueling long-term growth, n90 makes it easier to move forward with confidence.
Here’s what sets n90 apart.
- Transparent and Trust-Based Lending: With n90, what you see is what you get. There are no hidden fees, surprise charges, or confusing fine print. You’ll know your costs upfront so that you can make informed decisions with peace of mind.
- Flexible Products for Every Stage of Growth: From bridge loans to small business loans and invoice financing, n90 offers financing solutions that match your business goals, whether you're managing cash flow, seizing an opportunity, or scaling operations.
- High Credit Limits That Grow With You: Depending on your annual revenue, you can qualify for up to ₱25 million in financing. That means more capital to back your ambitions without having to jump through hoops.
- Fast, Guided Application Process: No long waits. No guesswork. The n90 team walks you through the entire process and offers personal financial coaching, especially if you’re a first-time borrower.
- Built for Local Businesses: n90 works exclusively with registered Philippine businesses. If you're BIR, DTI, or SEC-registered and meet the revenue criteria, you're in good company.
Apply today and experience business financing with clarity, care, and commitment.
Final Note!
A well-timed business loan can help you bridge financial gaps, act on new opportunities, or keep things running smoothly. However, it works best when paired with clear goals and the right financial partner, one that understands the challenges of running a business in the Philippines.
If you're looking for fast, transparent, and flexible financing, n90 offers business loan solutions tailored to SME entrepreneurs. With a guided application process and high credit limits based on your revenue, it's built to support your plans.
Get funded with n90 today. Fast and transparent business loans designed around your revenue, supporting your next move.
FAQs
1. What is the typical interest rate for business loans in the Philippines?
Interest rates for business loans in the Philippines vary depending on the lender and the type of loan being applied for. Traditional banks typically offer lower interest rates, ranging from 5% to 12% annually. Private lenders may charge higher rates, ranging from 10% to 20%, due to the flexibility and faster approval processes they offer.
Government-backed loans often come with more favorable rates, sometimes as low as 5%. It's essential to shop around and compare rates to find the most suitable option for your business.
2. How long does it take to get approved for a business loan in the Philippines?
The approval time for a business loan in the Philippines can vary significantly depending on the lender. Traditional banks may take several weeks to process your application, as they require a detailed review of your financials and business records.
Private lenders often have a faster turnaround, with approval times ranging from a few days to a week. Government-backed loans might take longer due to higher demand and additional requirements, typically taking two to three weeks for approval.
3. Can I apply for a business loan if my company is a startup or has a limited credit history?
Yes, it is possible to apply for a business loan even if your company is a startup or has a limited credit history. Many lenders, including microfinance institutions and private lending companies, are more flexible with new businesses and less stringent in their requirements for credit history.
However, you will need to provide other forms of assurance, such as a strong business plan, proof of revenue, and collateral. Government-backed loans also offer options for startups, though they may have specific requirements related to business age and financial performance.
