Launching a new business is exciting, but getting the capital you need can be tough, especially when you don’t have assets to pledge as collateral. In the Philippines, this is a common struggle. Only 14% of banking system loans go to businesses outside Metro Manila, leaving many startups underserved.
However, there’s good news. The digital lending market is growing rapidly and is expected to surpass US$1 billion in 2025, thanks to the increasing demand for fast, flexible, and collateral-free financing.
In this blog, you’ll learn about the different startup business loans without collateral for startup and SMEs available in the Philippines, helping you fund your business without risking your assets.
What are Collateral-Free Loans?
Collateral-free loans are types of financing that don’t require you to pledge any assets, like property, equipment, or savings, as security. Instead, lenders approve these loans based on factors like your business’s cash flow, creditworthiness, and overall potential. This means you can access funds without risking your personal or business belongings.
For startups and small businesses, collateral-free loans offer a safer, more accessible way to get the capital needed for growth, operations, or emergencies, especially when traditional loans with strict asset requirements aren’t an option.
Why Collateral-Free Loans Matter for Startups?
Collateral-free loans are a game-changer for startups in the Philippines because they eliminate one of the biggest barriers to funding: the need for assets as security. As a new entrepreneur, you often don’t have valuable property or equipment to pledge, making traditional bank loans hard to access.
Collateral-free loans allow you to secure funding based on your creditworthiness and business potential, rather than your assets. This means you can get quick approval and access to funds, sometimes within days, allowing you to:
- Seize business opportunities as they arise without waiting for lengthy approval processes.
- Expand your operations or scale up your team to meet demand.
- Manage urgent financial needs, such as covering operational costs or addressing cash flow gaps.
- Access funding without putting your personal or business property at risk.
For startups, this flexibility and speed can be the difference between growth and missed chances. Now that you understand why collateral-free loans are important, let’s explore the different types available to startups like yours.
What are the Types of Startup Business Loans Without Collateral?
Here are five common types of startup business loans without collateral available in the Philippines:
1. Term Loans
Term loans are one of the most common types of funding available for startups. These are lump-sum loans you repay in fixed monthly installments over a set period, usually 6 months to 5 years.
They’re ideal for:
- Buying equipment
- Hiring staff
- Launching a new product
- Expanding into a new market
Approval depends on:
- Your credit history
- Business plan
- Monthly revenue
- Bank statements or cash flow projections
Key Benefits:
- Predictable repayments: You know exactly how much you’ll pay each month.
- Larger funding amounts: Often higher than what credit lines or personal loans offer.
- Use flexibility: Can be used for various startup needs, from operations to growth.
2. Credit Line
A credit line gives your business flexible access to funds up to a certain limit. You can withdraw money as needed and only pay interest on what you use. This is great for managing cash flow fluctuations or covering unexpected expenses.
They’re ideal for:
- Managing cash flow gaps
- Handling seasonal expenses
- Emergency purchases
- Short-term working capital
- Seizing quick business opportunities
Approval depends on:
- Business operating history
- Personal/business credit score
- Consistent monthly revenue
- Bank statement review
- Proper business registration
Key benefits:
- Flexible borrowing: Withdraw funds anytime up to your credit limit.
- Interest on used amount: Pay interest only on what you use.
- Quick access: Get funds fast for urgent needs.
- Builds credit: Helps improve your business credit profile.
3. Bridge Loans
Bridge loans are short-term loans to help you cover immediate financial needs while waiting for longer-term funding or revenue. They provide quick access to cash, making them useful when you’re between funding rounds or awaiting payment from clients.
They’re ideal for:
- Covering urgent expenses
- Filling funding gaps
- Managing payroll
- Financing projects between rounds
- Handling unexpected costs
Approval depends on:
- Business financial health
- Credit score
- Clear repayment plan
- Proof of incoming funds
- Business documentation
Key benefits:
- Fast funding: Quick access to short-term capital.
- Maintains operations: Keeps business running during gaps.
- Flexible repayment: Pay back when revenue arrives.
- Avoids equity loss: No need to give up ownership.
4. Invoice Factoring
With invoice factoring, you sell your unpaid invoices to a lender at a discount in exchange for immediate cash. This option is helpful if your business has slow-paying clients but needs working capital quickly, with no collateral required other than the invoices themselves.
They’re ideal for:
- B2B startups with invoices
- Needing fast cash
- Avoiding new debt
- Managing late payments
- Improving working capital
Approval depends on:
- Client’s creditworthiness
- Invoice value
- Invoice age
- Industry type
- Reliable payment history
Key benefits:
- Immediate cash flow: Convert invoices to cash quickly.
- No new debt: Get funds without increasing liabilities.
- No collateral needed: Only invoices are required.
- Outsourced collections: Factoring company handles invoice collection.
5. Small Business Loans
Some banks and fintech lenders offer unsecured loans specifically for startups. These loans often have streamlined application processes and flexible terms and are designed to support early-stage business needs without requiring collateral.
They’re ideal for:
- Launching new ventures
- Expanding operations
- Purchasing equipment
- Hiring staff
- Covering day-to-day expenses
Approval depends on:
- Personal and business credit score
- Business plan and projections
- Revenue history (if any)
- Proper documentation
- Lender-specific requirements
Key benefits:
- Predictable repayments: You know exactly how much you’ll pay each month.
- Larger loan amounts: Access more capital for growth.
- Longer terms: Manageable monthly payments.
- Builds business credit: Establishes your business’s financial track record.
Looking to fund your startup without risking your assets? n90 offers fast, collateral-free financing options like invoice factoring, bridge loans, and small business loans designed specifically for startups and SMEs.
With quick approvals, flexible terms, and a relationship-based approach, we make it easier for you to access the capital you need, right when you need it most.
Suggested Read: Unsecured Business Loans: Secured vs Fast
Factors to Consider Before Applying for Non-Collateral Business Loans
When you apply for a startup business loan without collateral, lenders scrutinize your application more closely since there’s no physical asset to secure the loan.
Understanding and preparing for these factors can significantly boost your approval odds and ensure the loan truly fits your startup’s needs:
1. Business Plan and Financial Projections
Lenders will examine your business model, your target market, and the strategies you intend to use to stay competitive. A well-drafted plan gives them insight into your understanding of the market and shows your ability to handle challenges.
Alongside the business plan, lenders will look for precise, realistic financial projections, covering income, expenses, and cash flow. This helps demonstrate that you understand your financials and have a concrete plan for managing and repaying the loan.
2. Creditworthiness
Both your personal and business credit scores are pivotal. A strong credit history signals lenders that you can manage debt responsibly. A high credit score can help you secure better loan terms, such as lower interest rates and more flexible repayment options.
If your credit history has gaps or issues, consider addressing them before applying. Paying off outstanding debts or resolving any discrepancies can significantly boost your approval odds.
3. Loan Amount and Purpose
Clearly define how much you need and why you need it. A well-thought-out plan for utilizing the loan funds shows that you’ve considered how to use the money effectively.
By being specific about the loan amount, you avoid the risk of overborrowing, which can strain your finances later. Aligning the loan with clear objectives helps lenders understand your business’s direction, whether it's for equipment, hiring, or marketing.
4. Research Lenders and Compare Offers
Don’t settle for the first loan offer you come across. Explore various lenders, including traditional banks, fintech companies, and online lending platforms. Each may offer different terms, such as interest rates, repayment schedules, and processing fees.
Compare these terms to identify which lender aligns best with your needs. Some lenders, like n90 offer faster approval times and flexible repayment terms, which can be beneficial depending on the urgency of your funding needs.
5. Eligibility Requirements
Lenders in the Philippines usually have specific eligibility criteria. For example, they may require:
- Operational history, typically between 1 to 3 years.
- Owners must generally be at least 21 years old and not older than 65 at loan maturity.
- Valid DTI/SEC registration to confirm that your business is legally recognized
Meeting these benchmarks not only ensures that your business qualifies but also streamlines the application process.
6. Required Documentation
The documentation required for non-collateral loans varies depending on the lender, but there are a few key items you will likely need:
- Business Registration Documents (DTI or SEC registration)
- Financial Statements (Income Statement, Balance Sheet, and Cash Flow Statement for the past 3–6 months)
- Tax Returns (usually for the past year)
- Bank statements (often for the past 6–12 months)
- Government-issued ID (for both business owners and authorized signatories)
Considering these factors helps you make informed decisions, increases your chances of approval, and ensures the loan supports your startup’s growth without unnecessary risks.
Securing a loan without collateral may seem challenging, but breaking it down into manageable steps can make the process more straightforward.
Steps to Obtain a Loan Without Collateral
Applying for a non-collateral startup loan is simple and straightforward if you follow these key steps:
Step 1: Research Your Loan Options
Identify lenders offering collateral-free business loans, such as traditional banks (e.g., Security Bank), fintech lenders (e.g., First Circle, n90), and online platforms (e.g., RFC).
Compare their products, interest rates, eligibility criteria, and loan features to find the best fit for your needs.
Step 2: Check Eligibility and Prepare Financials
Review the lender’s eligibility requirements, which often include at least 6–12 months of operations and minimum monthly revenues (e.g., ₱100,000/month for some lenders).
Prepare your business financials, such as,profit and loss statements, cash flow, and balance sheets, to demonstrate your repayment capacity.
Step 3: Gather Required Documents
Make sure you have these key essentail documents ready:
- Business Registration (DTI or SEC registration)
- BIR Form 2303 (proof of tax registration)
- Government-issued IDs (for both business owners and authorized signatories)
- Proof of address
- Bank Statements (for the past 3-6 months)
- Financial Statements (profit and loss, balance sheet, and cash flow)
Step 4: Fill Out the Application Form
Complete the lender’s online or in-branch application form with accurate business and personal details. Make sure all information matches your supporting documents.
Step 5: Submit Documents and Undergo Verification
Upload or submit your documents for verification. Some lenders may request additional information or a personal discussion to assess your business profile and risk level.
Step 6: Loan Assessment and Approval
The lender reviews your application, checks your creditworthiness, and may contact you for clarification. Some fintech lenders like n90 can provide decisions within hours, while traditional banks may take several days to process and approve your loan.
A clear understanding of these steps can help you prepare a strong application and improve your chances of approval.
Suggested Read: Small Business Ideas to Start with PHP 50k Capital in the Philippines
How n90 Supports SMEs and Startups in the Philippines?
For startups and SMEs, finding the right financial partner can make all the difference. n90 offers flexible lending solutions specifically designed to meet your business needs. We provide small business loans, bridge loans, and invoice factoring with a focus on transparency and trust.
- Tailored Loan Options: Whether you're a growing startup or an established SME, we offer loan products that align with your business size, stage, and goals.
- Fast, Hassle-Free Application and Approval: n90 uses digital processing and streamlined requirements, so you can apply online and receive approval in as little as 24–48 hours, much faster than traditional banks.
- Transparent, Upfront Terms: All fees, interest rates, and repayment schedules are clearly explained from the start. There are no hidden charges or surprise penalties, so you can confidently plan your finances.
- Personalized Support from Real Experts: Our dedicated team understands the needs of Filipino entrepreneurs. You’ll have a single point of contact to guide you through the process, answer your questions, and help you make the best financial decisions for your business.
Eligibility criteria for n90’s small business loans include:
To qualify for n90’s small business loans or invoice factoring, your business should meet these basic requirements:
- Business Operations: At least 3–6 months of continuous operation (depending on the loan product).
- Revenue: Minimum monthly revenue of ₱100,000 (for most products). Higher credit limits may require higher turnover.
- Business Registration: Must be a legally registered business in the Philippines (DTI for sole proprietors, SEC for corporations/partnerships, and BIR Certificate of Registration).
- Credit Standing: A good business credit history or, for newer businesses, a strong record of sales and cash flow.
- Supporting Documents: Basic documents such as valid government IDs, business permits, and recent bank statements will be required.
Exact requirements will be shared during your loan application to ensure the best fit for your business. With n90, you can access flexible, tailored financing solutions that support your growth and help you overcome challenges.
Conclusion
Finding the right funding without risking your assets is crucial for any startup in the Philippines. Collateral-free loans open doors to capital that can help you manage expenses, grow your business, and stay competitive. By understanding your options, from small business loans to invoice factoring, you can choose the solution that fits your unique needs.
At n90, we specialize in providing flexible, transparent lending solutions tailored to startups and SMEs. With our expert support and customized loan options, we can help you decide on the right funding you need to succeed without the hurdles.
Contact us today to learn how n90’s tailored lending solutions can empower your growth, quickly, flexibly, and without collateral.
FAQs
Q. What types of businesses qualify for collateral-free loans?
A. Most lenders focus on startups and SMEs that are legally registered and demonstrate steady cash flow or revenue. Requirements vary, but your business should have a basic operating history and a clear plan for loan use.
Q. Are collateral-free loans more expensive than secured loans?
A. Generally, yes. Since lenders take on more risk without collateral, interest rates and fees might be higher. But the flexibility and faster approval often outweigh the cost for startups.
Q. How long does it take to get approved for a loan without collateral?
A. Approval times vary by lender but usually range from a few days to a couple of weeks. Lenders like n90 streamline the process by offering tailored financial products, financial coaching, and support, helping businesses maintain cash flow and meet their unique needs efficiently.
Q. Can I use collateral-free loans for any business purpose?
A. Most lenders allow you to use funds for a wide range of business needs like inventory, payroll, marketing, or equipment. It’s best to check specific terms before applying.
Q. What happens if I can’t repay a collateral-free loan on time?
A. Missing payments can affect your credit rating and may lead to collection efforts. Since there’s no collateral, lenders can’t seize assets but can take legal action to recover the loan. It’s important to communicate early if you face repayment issues.
