For many Filipino entrepreneurs, getting a business loan is the bridge between opportunity and success. Whether you’re restocking inventory, purchasing new equipment, or expanding to a second branch, the right financing can drive business growth. But before signing any loan agreement, one question matters most: how much will it really cost you?
This cost comes in the form of interest rates— the price you pay for borrowing money. Understanding how business loan interest rates in the Philippines work can make all the difference between a wise investment and unnecessary financial strain.
In this guide, we’ll cover everything you need to know before applying for a business loan this year.
What Are Business Loan Interest Rates?
Interest rates represent the percentage of your loan amount that you pay back to the lender as a fee for borrowing money. They are the backbone of any financing decision — determining your monthly payments, total repayment amount, and overall profitability.
There are two main types of interest rates:
- Fixed Interest Rate – Stays the same throughout the loan term, offering stability and predictability.
- Variable Interest Rate – Fluctuates based on market trends or benchmark rates (like the BSP’s overnight rate), meaning your monthly payments can increase or decrease over time.
Choosing between the two depends on your business goals. If you value consistency in budgeting, a fixed rate is ideal. If you can manage slight payment changes in exchange for potential savings, variable rates might be suitable.
Average Business Loan Interest Rates in the Philippines (2025)
In 2025, business loan interest rates in the Philippines vary depending on the type of lender, loan product, and borrower profile. Here’s an overview:
| Lender Type | Typical Interest Rate (Annual) | Loan Term | Notes |
| Commercial Banks | 6% – 12% | Up to 5 years | Requires collateral and a strong credit history |
| Government Financing Programs | 2% – 10% | Up to 3 years | Limited to registered SMEs under specific programs |
| Private Financing Companies | 1.5% – 3% per month (effective annual 18% – 36%) | 6 months – 2 years | Often non-collateral and faster approval process |
| Online Lending Platforms / Fintechs | 2% – 5% per month | 3 months – 1 year | Convenient digital applications but shorter terms |
Private financing companies like Zenith Capital focus on speed, accessibility, and flexibility, which justifies slightly higher interest rates compared to traditional banks. However, what borrowers gain in return is faster processing, fewer requirements, and no collateral needed — a game-changer for small and medium enterprises (SMEs).
Factors That Affect Business Loan Interest Rates
No two businesses are the same, and neither are their interest rates. Lenders consider several key factors when determining your rate:
- Creditworthiness
A strong credit record, whether business or personal, often leads to lower rates. Lenders reward reliability and repayment consistency. - Business Age and Stability
Established businesses with a proven track record are considered less risky and usually receive better terms than newly registered companies. - Loan Amount and Term
Larger loans with longer terms may have slightly lower rates due to economies of scale, but they accrue more interest overall. - Collateral Availability
Secured loans (with assets pledged as collateral) often have lower rates. Non-collateral (unsecured) loans, while more accessible, typically have slightly higher rates to offset the lender’s risk. - Economic Climate
Central bank policies and inflation trends influence how lenders price loans. In 2025, moderate inflation and cautious optimism in the Philippine economy are keeping rates relatively stable.
How to Calculate Business Loan Costs
Before applying, it’s wise to understand how much you’ll actually pay over the loan period. For example, let’s say you borrow ₱500,000 at a 2.5% monthly interest rate for 12 months.
- Monthly interest = ₱500,000 x 0.025 = ₱12,500
- Total interest = ₱12,500 x 12 = ₱150,000
- Total repayment = ₱650,000
This simple calculation helps you visualize your repayment obligations and plan your finances effectively. Always request a clear computation before approval. Transparent terms ensure you know exactly what to expect, helping you make informed borrowing decisions.
Comparing Bank Loans vs. Other Financing
| Criteria | Bank Loans | Private Financing (Zenith Capital) |
| Processing Time | 2–4 weeks | 2–3 days |
| Collateral | Required for most cases | Not required |
| Interest Rate | 6%–12% annually | 1.5%–3% monthly |
| Accessibility | Strict requirements | Flexible documentation |
| Ideal For | Large, established businesses | SMEs and entrepreneurs seeking fast approval |
While banks may offer lower rates, private lenders provide speed and convenience, especially for entrepreneurs who can’t afford to wait weeks for approval or provide collateral.
The Real Value Beyond Interest Rates
While rates are important, focusing solely on them can be misleading. The best loan isn’t always cheapest — it’s the one that fits your business’s needs, timing, and capacity.
For many SMEs, speed and accessibility outweigh a slightly higher rate, especially when funding urgent opportunities like:
- Inventory purchases
- Bulk orders
- Opening a new store
A trustworthy lender like Zenith Capital ensures that you not only get financing fast but also understand the full picture — empowering you to make informed financial decisions for long-term success.
Business loan interest rates in the Philippines will continue to fluctuate with market conditions, but what remains constant is the need for clarity and trust between lenders and entrepreneurs. By understanding how rates work, you gain control — transforming borrowing from a burden into a growth opportunity.
Ready to grow your business with confidence?
Apply for Zenith Capital’s Ka-Azenso SME Quick Loan today — offering loan amounts from ₱100,000 to ₱1,000,000, approvals in as fast as two days, and fully transparent terms you can trust. Start your application and move your business forward today.