Filipino entrepreneurs face a myriad of challenges, ranging from bureaucratic hurdles to infrastructure limitations. However, the most common struggle is securing sufficient funding. Many micro, small, and medium enterprises (MSMEs), even the most profitable franchise, share this pain point, and considering MSMEs comprised 99.59% of businesses in the Philippines in 2022, the following data is alarming.
According to the Bangko Sentral ng Pilipinas (BSP), loans extended to MSMEs in 2022 fell below the mandated 10% threshold for banks. Despite the many bank business loan options in the Philippines, like private business loan and enterprise business loans, these numbers indicate that MSMEs still have difficulties accessing financial resources. Thus, they may not be able to achieve their maximum potential.
As such, it’s crucial to choose the right bank for your corporate needs and utilize tools for SME growth. Read on for insights on selecting the ideal financial ally for your business aspirations, including a review of the top banks in the country.
Criteria for Choosing the Best Bank for Business Loans
Selecting the optimal bank for business loans is a critical decision as this influences the financial trajectory of your ventures. Here are some factors to consider when deciding on a bank for various business loan industries:
Interest rates
Seek banks offering competitive interest rates to minimize borrowing costs and enhance profitability. Favorable interest rates not only ease financial burdens but also contribute significantly to the long-term financial health of your business.
Loan terms
Evaluate repayment schedules and flexibility offered by different banks, as these factors have a direct impact on cash flow management. Flexible loan terms can provide your business with the necessary breathing room during lean periods and enable you to navigate financial fluctuations more effectively.
Eligibility requirements
Eligibility criteria differ across banks and financial sources. Some may have stringent requirements, like PhilGEPS Certificate of Registration, that can potentially limit accessibility for certain businesses. Hence, it’s imperative to align your business’s eligibility with the bank’s specific requirements to streamline your loan application process.
Customer service
The best bank for business loans in the Philippines has exceptional customer service. A bank that’s prompt and supportive to its clients is more likely to facilitate smooth communication and resolve issues swiftly. This quality also fosters a positive banking experience and maintains a healthy relationship.
Reputation in the market
It’s best to partner with a bank known for ethical practices, seamless transactions, and overall reliability. A bank’s standing within the industry also ensures stability and reflects its commitment to supporting your financial journey.
8 Best Banks to Get a Business Loan in the Philippines
With the array of banks offering business and commercial loans, finding the right one can be daunting. However, certain institutions stand out for their tailored offerings and unwavering commitment to supporting entrepreneurial endeavors.
Below are some of the best banks who prioritize success and growth for their clients:
1. UnionBank
UnionBank offers the MSME Business Loan, catering to entrepreneurs with a credit range from ₱50,000 to ₱1 million at a monthly interest rate of 3%. This loan option doesn’t need collateral, and successful applicants may enjoy same-day approval.
The loan term is also flexible, varying from three to 36 months. This Union Bank business loan works best for MSMEs seeking additional working capital to bolster their operations.
2. Bank of the Philippine Islands (BPI)
The BPI Family Ka-Negosyo or BPI Negosyo loan aids in starting or expanding a business. It includes options for term loans, franchising loans, and credit lines. Term loans start at a minimum amount of ₱500,000, while franchising loans begin at ₱100,000. A BPI business loan term spans from one to 10 years.
As for credit lines, they’re available for a one-year term with an interest rate of 4.50% over 90 days. It’s important to note that collateral is one of the BPI business loan requirements in the Philippines.
3. Security Bank
Security Bank’s SME Business Express Loan is ideal for short-term financing. Loans can be up to ₱5 million and don’t necessitate collateral. It also requires minimal documentation and provides automatic fund disbursement. Processing time can be as quick as five days.
The Security Bank business loan duration spans from 12 to 36 months, featuring interest rates at 1.50% and increasing to 1.95% for extended terms.
4. Development Bank of the Philippines (DBP)
DBP’s Small Business Puhunan Loan Program (SBPLP) is the government’s initiative to offer working capital credit to small enterprises. It serves as an entry point for small borrowers, potentially leading them to access larger loans within the regular lending program.
Loan amounts range from ₱300,000 to ₱1 million, with interest rates set at 9% per annum for a one-year term loan and 10% for a two-year term loan.
5. Banco De Oro (BDO)
BDO’s SME Loan is a single disbursement loan that helps finance long-term investments, like equipment procurement or building a new office. It allows manageable monthly payments and enables collateral utilization of up to 70% of its value.
The loan starts at a minimum of ₱1 million, while the maximum is ₱20 million. Their loan term expands from one to ten years, with 6.25% to 7.25% interest rates.
6. Landbank
Landbank offers 13 variations of bank loans, with their respective terms, amounts, and purposes. Some examples include the Franchising Lending Program, Emerging Filipina Lending Program, and OFW Reintegration Program. Regardless of the availed credit program, a Landbank business loan typically starts at a minimum of ₱100,000.
7. Metrobank
Metrobank has multiple financial options covering construction-related needs, agricultural projects, and franchising. Their SME loans encompass three types: SME credit line, SME short-term loan, and SME long-term loan. While collateral is required, businesses can secure a Metrobank business loan starting from a minimum amount of ₱500,000.
8. Philippine National Bank (PNB)
The PNB business loan comes in two forms. Their long-term loan targets medium to expanding businesses, with repayment periods spanning two to seven years. Conversely, their small business loan entails repayments within a year and is ideal for smaller companies. Besides these options, there are also credit lines and specialized lending programs.
Empower Your Business, Choose the Right Financial Partner
Many businesses often encounter hurdles in funding for their ventures, hindering growth. However, by exploring available options and considering key criteria, you can select the best bank and SME loan for your company’s needs. In this landscape, informed decision-making becomes paramount for success. Check out these tips to improve getting a business loan.
Besides the listed banks, Zenith Capital is here as a flexible and reliable alternative for business financing. As a reputable lending company in the Philippines, Zenith Capital caters to diverse corporate needs, offering a hassle-free and efficient application process.
Don’t let funding obstacles hold your business back. Explore Zenith Capital’s offerings today and unleash your business’s full potential. Contact us or fill out the Apply Now form for a smooth business loan application experience!
Rizza Templonuevo is not just an accomplished finance professional and business leader, but also a loving wife and a dedicated mother of two. With a passion for helping businesses grow and thrive, she brings her extensive knowledge and expertise as Vice President of Zenith Capital Credit Group Corporation to help countless SMEs and corporations across the Philippines access the financing they need to succeed.
When she’s not busy with work, Rizza enjoys immersing herself in the worlds of fashion and social events, as well as traveling to new and exciting places.
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