Securing the right financing is crucial for your SME’s growth, yet access to funding remains a top challenge for businesses in the Philippines. Globally, SMEs account for over 95% of enterprises and contribute up to 70% of net job creation in developing countries, but they often face restrictive lending environments and high interest rates.
In the Philippines, the financing gap for SMEs is estimated at over ₱170 billion, with banks lending only about 4.5% of their portfolios to this sector as of 2024.
This article explores the latest SME business financing programs and loans available to you, compares key options, and provides actionable insights to help you understand the dynamics of the funding and fuel your business ambitions.
TL;DR:
Securing funding is a major challenge for SMEs in the Philippines, with a ₱170 billion financing gap and limited access to traditional bank loans. This guide breaks down the top financing programs available to local SMEs—including franchise funding, purchase order financing, business expansion loans, and rehabilitation support.
Each option comes with clear terms, low interest rates, and support for early-stage or growing businesses. We also explore how n90 helps Philippine SMEs access fast, flexible, and transparent financing tailored to their operational needs.
Franchise Funding Opportunities
Franchise funding is tailored for returning OFWs, their families, and both new and existing MSME franchisees. You can borrow up to 80% of your total franchise investment, with a cap of ₱20 million. The first year is interest-free, followed by a 1% monthly interest rate on the diminishing balance. The loan is repayable monthly over three years, and you may opt for a grace period of up to one year.
Documents Required:
- Proof of business registration (DTI or SEC)
- Mayor’s Permit or Barangay Permit
- Franchise agreement or offer sheet
- Valid government-issued IDs of owners
- Audited financial statements or bank statements
- Business plan or proposal
Purchase Order Financing Solutions
This financing option is open to MSMEs with at least one year of operations and a track record of at least three completed purchase orders in the past two years. You can access up to 80% of your purchase order value, with a maximum of ₱20 million. The interest rate is 1% for every 30-day period, and loan terms range from 30 to 360 days. The facility allows multiple drawdowns up to your approved credit limit.
Documents Required:
- Valid purchase orders or sales contracts (valid for at least two months)
- Certificate of business registration (DTI/SEC)
- Notarized board resolution or Secretary’s Certificate (for corporations/partnerships)
- Financial statements
- Supplier contracts or quotations
Business Expansion Financing
If your business is newly established, with at least three months of sales, you can access business expansion loans designed to support your growth. These loans range from ₱50,000 to ₱3 million. You benefit from zero interest for the first year, then a 1% monthly interest rate (calculated on the diminishing balance) for the remaining term. Repayment is monthly for up to three years, and you can enjoy a grace period of up to 12 months, which can be split into three-month intervals.
Documents Required:
- Business registration and permits (DTI/SEC, Mayor’s Permit)
- Audited financial statements (typically last 2–3 years)
- Income tax returns
- Business plan outlining expansion strategy
- Bank statements
- Valid IDs of business owners
Enterprise Rehabilitation Financing
Enterprise rehabilitation loans are designed for businesses needing support to recover from setbacks. You can borrow up to ₱300,000. The loan is interest-free for the first year, then carries a 1% monthly interest for the second and third years, calculated on the diminishing balance. Repayment can be spread over three years, with a three-month grace period available at your discretion.
Documents Required:
- Proof of business registration (DTI/SEC)
- Damage or loss assessment report
- Financial statements or proof of loss
- Rehabilitation plan or proposal
- Valid IDs of business owners.
After reviewing these specific financing programs, it’s crucial to understand the different types of loans available and how they can serve your business’s specific financial needs.
Choosing the Right Loan for Your SME
Getting the right funding isn’t just about getting money, it’s about picking what suits your business needs and cash flow. Different loans serve different purposes, and knowing their differences helps you decide wisely.
- Short-term Loans: These cover urgent expenses like paying suppliers or handling seasonal inventory. For example, a ₱500,000 bridge loan can help you manage cash flow while waiting for customer payments.
- Long-term Loans: Designed for bigger investments like opening a new store or buying equipment. For instance, a ₱3 million business expansion loan spread over three years can fund your growth plans smoothly.
- Secured Loans: Require collateral, such as property or equipment. A secured loan might offer lower interest rates because the lender has some guarantee.
- Unsecured Loans: Don’t require collateral but often come with higher rates. This can be ideal if you lack assets but need quick funds.
- Alternative Financing Options: Tools like invoice factoring let you access cash tied up in unpaid invoices. For example, if you have ₱1 million in outstanding invoices, factoring can advance you up to 80% of that amount quickly.
Now that you have a clearer picture of the different financing options available, let’s explore how n90 customizes these solutions to meet the unique needs of Philippine SMEs like yours.
How n90 Supports Your SME Financing Needs?
Finding the right financing can feel like navigating a maze, especially for SMEs juggling growth, cash flow, and operational challenges. n90 understands these hurdles and offers lending solutions designed specifically for Philippine businesses of varying sizes and needs.
- Bridge Loans provide fast, short-term cash to help you cover gaps between payments and expenses. This loan gives you quick access to funds, keeping your operations smooth without the stress of delayed payments.
- Small Business Loans offer flexible funding tailored to your growth plans. From purchasing new inventory to expanding your team or opening a new location, these loans support bigger projects with credit limits ranging from ₱1 million to ₱25 million, depending on your business size.
- Invoice Factoring helps you convert your unpaid invoices into immediate cash. Instead of waiting for your customers to settle their bills, this service allows you to improve cash flow by accessing funds tied up in accounts receivable, so your operations and growth stay uninterrupted.
To qualify, your business must be registered with the BIR, DTI, or SEC, reflecting a commitment to compliance and financial responsibility.
What sets n90 apart is its focus on building lasting relationships grounded in trust and clarity. You won’t find hidden fees or confusing terms here. Instead, expect transparent financing paired with financial coaching that guides you through every step.
Conclusion
Securing appropriate financing is essential for the sustainable growth and operational stability of your SME. A thorough understanding of available loan programs enables you to select solutions that best align with your business objectives and financial capacity. Whether initiating operations, pursuing expansion, or managing working capital, access to suitable funding is crucial.
n90 provides customized lending solutions tailored to the needs of Philippine SMEs, emphasizing transparency and flexibility. To explore financing options designed to support your business ambitions, consider partnering with n90 and take a decisive step toward strengthening your enterprise.
Get in touch with n90 today or call us on +63 962 663 1393 and get funded.
FAQs
1. What’s the best financing option for a newly established SME in the Philippines?
A: If your business is less than a year old but already generating some revenue, business expansion loans are ideal. They offer amounts from ₱50,000 to ₱3 million, include a zero-interest grace period for the first year, and provide repayment flexibility over three years. You’ll need basic documentation like permits, bank statements, and a growth plan.
2. Can I apply for purchase order financing even if I don’t have collateral?
A: Yes, purchase order financing does not require traditional collateral. Lenders focus on your existing purchase orders and supplier contracts. If you’ve completed at least three POs in the past two years, you can access up to 80% of the PO’s value, making this a great option for operational funding without asset-based security.
3. How is n90 different from traditional bank lenders?
A: Unlike banks that may require months of processing and extensive paperwork, n90 specializes in fast-tracked approvals, minimal documentation, and flexible terms. Plus, they offer financial coaching, invoice factoring, and custom loan packages for SMEs, making them a more agile and approachable partner for businesses looking to grow sustainably.
