Detailed Instructions for New Entrepreneurs on Obtaining a Business Loan in the Philippines


Obtaining start-up funding is often tricky when establishing a new business. But, finding a good and reliable funding source is even more critical. 

While exploring options for financing a new business in the Philippines, government, bank, or private loans are often among the top considerations. 

Other commonly studied options are personal savings, including borrowing from friends and family.

About two-thirds of the micro, small, and medium-scale firms in the Philippines experience difficulty achieving success due to financing issues. 

Family, friends, and personal savings can be excellent sources but may need more start-up capital. 

Due to bureaucratic processes and the collateral involved, government, bank, and private loans take time to acquire. 

Mobile loan apps are available for business financing at affordable interest rates. These apps, the issue of collateral, and lengthy processing formalities. 

This article provides new and existing entrepreneurs with valuable instructions on loan acquisition in the Philippines.

What is a Business Loan?

The definition of a business loan is the same everywhere in the world. It’s a type of funding precisely mapped out for people intending to start a new company or expand existing ones.

Lenders provide individuals (borrowers) funds to start or expand a business, pay off debts, etc. Last year, the Department of Trade and Industry (DTI) approved 21,695 loan applications to provide enterprises with urgent relief from the COVID-19 pandemic. 

These advances offer higher amounts, with longer payment durations, strict eligibility requirements, and application processes than other types. However, they provide financial relief to entrepreneurs.

Types of Start-up Business Loans in the Philippines

Depending on your business’s financial requirements, loans in the Philippines are of various sorts. Knowing the categories available is necessary to help you decide the kind of advance that suits your start-up.

Term Loans

This kind of loan is for short and long-term funding. It enables entrepreneurs to keep their capital intact by spreading repayment plans and paying in regular installments. 

These are ideal for financing a franchise business, adding fixed working capital, purchasing new equipment, and expanding. 

It is also suitable for investing in construction, renovation, or purchasing stores and office space. Filipino lenders provide amounts between ₱100,000 and ₱20 million for term loans.

Credit Line

A credit line or line of credit is a short-term loan that allows businesses or individuals to borrow money on demand and pay interest only on the amount used. 

It will enable people continuous access to funds after repaying a previous one without a new application.

You can use a credit line to purchase additional supplies, inventory, working capital, contract financing, etc. 

They are valid for one year and may be renewed annually with lenders’ approval. In the Philippines, SME owners are liable to borrow from ₱500,000 to ₱20 million.

Secured Business Loans

A fast loan is a long-term advance that requires collateral, such as bank deposits and real estate properties. If the borrower defaults in repayment, the lender reserves the right to claim the security to recover the loss. 

These types of advances are secured because the security involved reduces the risk of losses for lenders. Application fees and collateral registration fees also apply to such advances.

Unsecured Business Loans

This kind of advance can be acquired without collateral. However, they may prove challenging to obtain, as the individual must have an impeccable credit history. 

While borrowing without collateral may have disadvantages, it is very flexible and easy to acquire.

Business funding from loan apps falls into this category. These apps provide financing outside the banks and government institutions with zero application fees. 

When using apps, you can rest assured that your data is secure. One notable advantage of securing advances with apps is that you can determine your amount according to your debt-to-income ratio (DTI).

Criteria to Qualify for a Business Loan Application in the Philippines

The criteria for applying for business loans in the Philippines differ based on the source institution. Here are some requirements to qualify for a loan.

  • The applicant must be a Filipino aged between 21 but must not exceed 65 years at maturity.
  • Applicant must have a DTI or SEC-registered business with a minimum of 3 years of profitable operations.
  • The company must meet the minimum annual gross sales
  • Must have good credit records.

Requirements for Business Loan Applications

Before applying, you must have the following.

  • A valid government-issued Identity card, either Driver’s license, TIN ID, PRC ID, Postal ID, or UMID).
  • Passport photographs.
  • BIR Certificate of Registration.
  • DTI or SEC certificate.
  • Photocopy of audited financial statements.
  • Business profile.
  • Completed loan application formed

Considerations When Choosing A start-up Business Loan

An entrepreneur seeking a loan to start a new or expand an existing firm in the Philippines must consider one that best meets his financial needs. Here are some factors to consider.

The purpose for acquiring the loan

Whether short or long-term, business loans are designed to cater to specific needs. There are advances for short-term financing, like inventory purchase, and long-term funding, like building your organization.

Loan Amount

After determining why you’re acquiring the loan, the next thing to do is work out how much you need for the company. Available amounts vary based on the type of advance you choose.

Method of Funding

This entails your preferred means of accessing the funds, whether one-time payment or otherwise. 

Other things to consider before acquiring funding include the term, collateral, repayment mode, and interest rate.

Sectoral Distribution Table

Industry Sectors Number of SMEs
Wholesale and Retail Trade (Motor Vehicles and Motorcycles repairs) 539,006
Accommodation and Food Service Activities 151,748
Manufacturing 130,573
Other Services Activities 69,254
Financial and Insurance Activities 50,089

Link: Republic of the Philippines Department of Trade and Industry

The table shows the top five industry sectors in the Philippines according to the number of micros, small, and medium-scale enterprises in 2021. 

The above industry accounted for 87.40% of the overall number of MSME establishments in the Philippines in 2021.

The Philippines Statistics Authority (PSA) recorded 1,080,810 business enterprises in the country in 2021. MSMEs recorded enormous numbers of 1,076,279 (99. (modafinil online reddit) 58%).


The kind of funding you use to start your business affects its success. For example, if you choose a loan with difficult or unrealistic terms, you may encounter difficulties while paying back. 

Whether it’s filling out application forms, collateral registration, or interest rate considerations, start-up entrepreneurs must carefully evaluate all processes to choose what best suits their needs.

One more thing to consider before picking a type is the size of your start-up business. The size of your company will determine the kind, amount, and sometimes the length of time within which repayment is spread. 

Also, consider mobile loan apps to save you the lengthy process involved in funding applications. 


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