Wednesday, January 24, 2024

Government Loans For Small Business Philippines

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How Much Loan Can I Get To Start A Business

PH Gov’t extends loan program for small businesses | ANC

There is no one answer to this question as the amount of loan you can get to start a business will depend on a number of factors, including the type of business you are starting, your personal financial situation, and the lending criteria of the bank or financial institution you are applying to. However, as a general guide, you may be able to borrow up to 80% of the total cost of starting your business, with the remaining 20% coming from your own savings or other sources of funding.

Depending on the lender and type of financing, you may be able to borrow between $1,000 and $5 million. Several types of lenders offer a diverse range of loan amounts, with banks offering the most and microlenders offering the least. Large amounts are typically backed by collateral, which includes equipment or vehicle financing. There are numerous variables that affect how much you can qualify for and how much a lender can offer. If you need a little extra money, you can get it from alternative business loans such as merchant cash advances and factoring. Borrowing more will result in higher interest and fees, and your monthly budget will be higher. You will receive an advance on your businessâs future sales, up to $10 million, through a merchant cash advance. You can earn millions of dollars if you factor your unpaid invoices. While both types of loans are typically much more expensive than standard term loans, they are generally best used as an emergency measure.

How Do I Qualify For A Business Loan In The Philippines

Banks and financial institutions have different eligibility criteria. However, most of them have the following requirements:

  • Must be a Filipino citizen aged 21 but not older than 65 when the business loan matures
  • Should have an SEC-registered or DTI-registered business with at least 3 years of profitable business operations
  • Must meet a minimum annual gross sales
  • Good credit standing

Related article: Sample Business Plan for a Small Business Loan Application

Cares 2 Program Features

  • Loan Limit: Microenterprises may borrow from P10,000 up to P200,000 and Small enterprises may borrow up to P500,000.
  • Zero Interest Rate
  • Grace Period: Maximum of 6 months. After 6 months loan amortization will start. 12 months for loans, not more than P50,000, and 24 months for loans more than P50,000.
  • Service Fee: 6% if the loan does not exceed 18 months and 8% if the loan term exceeds 18 months.

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Msme Credit Guarantee Program

Micro, small and medium enterprises struggling with limited working capital after the pandemic may consider getting bank loans. However, not all MSMEs are capable of paying these back, limiting the loans they can apply for.

This is why the Philippine Guarantee Corporation partnered with various banks to create the MSME Credit Guarantee Program to help MSMEs apply for loans that might have become out of their reach.

Who are eligible?

This program was created for micro to medium-sized enterprise owners who have been affected by the COVID-19 pandemic.

What are the terms?

  • Loanable amount: Maximum of P50 million per borrower Loans exceeding that amount will be subject to the approval of PhilGuarantee based on the guidelines for their Regular Credit Guarantee Program.
  • Loan term: 1 to 5 years
  • Interest rate: Interest rates, collaterals, and securities will depend on the lending bank or financial institution.
  • Guarantee limit: 50% of the principal loan amount
  • Guarantee term: 1 year
  • Additional fees: Each amendment will cost P5,000

What are the documentary requirements?

The requirements will vary depending on where you apply for this loan. Contact a PhilGuarantee-partnered bank near you to inquire about the necessary application documents.

You can find out more about the program on the official PhilGuarantee website.

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SBCorp relaxes terms on tourism loans due to poor availment

With the private sector of the economy shaking in the wake of the worldwide financial recession, many people have lost their jobs. Job security affords you piece of mind, and eliminates worry and stress. Worry and stress cause health concerns, and you certainly dont need any extra burdens at this time. Its time for you to take care of yourself, because no one else will do it for you. The best way to protect your job is to have your own business. The Federal government wants to help, and so there are federal grants for small businesses available online right now. Grants for small businesses may be the answer to what youve been looking for.

Federal small business grants allow people such as yourself to get the small business funding you need to get going, to go in a different direction, or to expand if you already have a small business. Federal grants for counseling for small businesses are available in all shapes and sizes you just have to pick out the one thats right for you. There are counseling small business grants for a multitude of business types with many more being added all the time.

Government grants are plentiful, but the process can sometimes resemble a marathon race. Many people get discouraged during the process, and quit before they reach the finish line and acquire one of the federal small business grants. Well, youve come to the right place the days of frustration and dead-ends in seeking small business grants are over.

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Are Federal Small Business Grants Better Than Small Business Loans

It depends. Small business grants and small business loans each have their place in small business financing. Your choice depends on:

  • How quickly you need the funds
  • Whether you are working on a single project or multiple projects
  • Ability to repay the loan

In an ideal world, a small business would be fully self-funded and self-sustained. In fact, this is the recommendation for startup businesses. However, there may come a point at which additional funding is needed to facilitate business growth. The table below explains the pros and cons of small business grants from federal agencies and small business loans, so you can determine which funding option makes most sense for your business.

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Business Loan Philippines Bdo

A business loan from BDO in the Philippines can help your business expand, cover unexpected costs, or take advantage of new opportunities. Whether you need a short-term loan or a long-term line of credit, we can work with you to tailor a loan that meets your needs. We offer competitive rates and flexible repayment terms, and our experienced team is ready to help you every step of the way.

In the Philippines, the bank BDO is one of the largest and oldest private banks. The bank has over 1,000 branches across the country and serves both businesses and consumers. If backed by collateral, the loans range in size from $1 million to $20 million. It is best suited for dealing with operational expenses and purchasing seasonal inventory in the context of the BDO SME loan. It is customary for the lender to review your BDO loan application within 10 banking days of it being received. If you want to get started faster and less risky, you can go with First Circleâs Revolving Credit Line rather than BDO SME Ready Check. Business loans made by BDO typically require two years of operation and at least $1 million in sales. If you require a large loan amount, you will need a high-value asset. Pre-approval and post-approval fees are also required in the case of a BDO SME Ready Check.

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How To Get A Government Loan For Small Businesses In The Philippines

From OFWs to small businesses, many are in danger of losing their livelihood due to the pandemic. Thats why the government has extended many kinds of loan opportunities to help Filipinos get back on track. One such program is Bayanihan CARES, under the Department of Trade and Industry and Small Business Corporation , which aims to help MSMEs, OFWs, hospitals, and others affected by the pandemic.

As of December 31, 20211, the number of approved loans under the Bayanihan CARES program amounted to PHP 6.59B for 39,242 MSMEs. The program has also extended PHP 48.4M in loans for unemployed OFWs to start their own businesses under the CARES HEROES program.

If you have been struggling due to the pandemic, then this guide is for you. Read on to find out the different loan options that you can take advantage of according to your situation.

The Benefits Of Taking Out A Loan

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There are many benefits to taking out a loan for your small business.

A loan can provide the capital you need to start or expand your business, which can lead to increased revenues and profits. A loan can also help you manage your cash flow, as you will have access to funds when you need them.

Additionally, a loan can help you build your credit history, which can be beneficial if you ever need to take out a loan for personal or business purposes in the future.

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Best Bank For Business Loan In The Philippines

There are many different banks that offer business loans in the Philippines. However, not all of these banks are created equal. Some offer better terms and rates than others. So, when you are looking for the best bank for a business loan in the Philippines, be sure to compare different banks and their offers. This way, you can ensure that you are getting the best deal possible.

A business loan is an agreement between a bank, government, or private entity to provide funding for a business. There are four basic types of business loans available to meet the needs of any company. The goal of term loans is to make loan payments more manageable by distributing them throughout regular installments. Long-term loans can be obtained for five to fifteen years, while short-term loans can be obtained within a year. Entrepreneurs may need money for a variety of reasons, including expansion. It is common for business loans to be secured by term loans and credit lines. This type of loan has lower interest rates and longer repayment terms than other types of loans.

Choose The Right Loan For You

If your small business is struggling to get back on its feet after the pandemic or any other crisis, applying for financial aid can be a big help. These five government assistance programs for small businesses in the Philippines can be just what you need to recover what you lost over the pandemic.

Of course, its always important to do your research and consider other financers before applying for a business loan. The government isnt the only place you can go to for financial help.

Check out JK Capital, which provides loans for small businesses to help you get back on your feet and succeed in the new normal.

Also Check: Government Backed Mortgages For First Time Buyers

How To Apply For A Business Loan

  • Identify your reason for needing a loan.
  • What is the loan youre applying for? Purchase of equipment or real estate? Increase working capital or business expansion? Whatever that is, have a solid reason. Dont apply for a business loan if it is used to purchase unnecessary assets or fund losses.

    Have thorough research on the amount you really need. You dont want to ask for too much or the loan provider will doubt your credibility. Too little or youll deal with problems like lack of money to fund your overall business operations.

  • Check if youre qualified for a business loan.
  • For sole proprietors:

    • Small and medium-sized business owners with at least 2 years of profitable operation
    • Non-business owners with at least 2 years of steady income
    • Filipinos aged 21 but not older than 65 upon loan maturity

    Partnerships/Corporations

  • Find the best type of lender for your business needs.
  • Search for a loan provider that can best match your business loan needs. Different banks and loan providers in the Philippines offer a variety of short and long-term loans for small and medium-sized businesses.

  • Submit the required documents.
  • Different banks and lenders have different requirements but the common ones will be valid IDs, signed loan application forms, bank statements, and the latest income tax return.

    Prepare And Submit Documentation

    Department of Finance (@DOF_PH) / Twitter

    After filling out the application, the local bank representative will speak to you regarding the documents needed. These documents depend on whether you are a sole proprietor of the business, a first-time loan applicant, or a corporation.

    It will take a few days before you can collect these documents, so expect this process to take some time.

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    Find Out Exactly What You Need

    You should do a bit of self-analysis so that you can figure out what kind of business loan youll need. One of the best ways to do this is by asking yourself the following questions:

    • What will I use the business loan for?
    • How urgent is the need for funds?
    • Are there other sources of financing available to me?

    In general, term loans are best used in scenarios where you need a lot of time to pay for your loan and when you need a large amount of money upfront to fund a specific business need. Some of these scenarios may include:

    • Purchase of property/real estate
    • Purchase of vehicles such as trucks
    • Purchase of equipment and machinery

    Meanwhile, credit line loans are often a good choice when you need a readily available source of cash to fund repeated business expenses during slower seasons or if you have outstanding accounts receivable from your customers. If youre an SME, credit line loans are an excellent choice to better smoothen out your cash flow and to bridge your working capital needs. Some example scenarios where credit loans would be ideal include:

    • Purchase of additional inventory during a sudden surge of demand
    • Pay for your employees wages during off-peak seasons
    • Take advantage of unanticipated business opportunities

    However, these are only general rules. At the end of the day, you should only choose a loan that meets your current situation. Consider these two scenarios:

    Government Wage Subsidy Programs For Startups And Small Businesses

    Budget limitations and inexperience can make hiring new employees a difficult decision for small business owners. Luckily, If you are a startup or a small business in Canada, there are numerous programs that can help you get up and running. Some programs provide help with your cash flow in the form of financing, grants, subsidies and tax credits while others provide resources such as training, mentoring and coaching. Many small businesses particularly when they are in the startup stage should take the time to research these programs and send applications to the ones that might be applicable. Below are a list of three popular programs that are worth exploring further:

    Note that the programs listed below are independent of COVID. For a list of COVID related wage subsidies and tax credits, please see the Government of Canada website

    Are you planning to start a Canadian corporation?Let FastStart Your Corporation guide you through all the essential steps of starting your business and help you with the decision making process. Inside youll discover:

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    Cares For Travel By Dti & Sb Corp

    a. Best For: MSMEs in the tourism industry hit by the COVID-19 pandemic.

    b. Overview: CARES for TRAVEL is part of the Bayanihan CARES program that is focused on the recovery of the tourism industry. SB Corp, in partnership with the DOT, will provide tourism MSMEs with zero interest, no collateral loans.

    c. Loan Amount: PHP 10,000.00 to PHP 5 million depending on the asset size, annual sales of the business, as well as the submission of BIR-filed financial statements.

    • Micro: Up to PHP 600,000
    • Small: Up to PHP 3 million
    • Medium: Up to PHP 5 million

    d. Loan Term: 1 to 4 years depending on the loan amount.

    e. Interest Rate: Zero interest rate, no collateral

    f. Repayment Terms: A service fee of 4% to 8% depending on the loan term and amount borrowed

    g. Application Process: Same application process as Bayanihan CARES 2.

    h. Requirements: Same requirements as Bayanihan CARES 2

    Based On The Requirement Of A Collateral: Secured & Unsecured Business Loans

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    In order to protect their capital, lenders may ask for collateral, an asset that can be used to cover the payment of your loan in case you are unable to pay it back.

    a. Secured Loans

    Secured Loans are loans that require collateral. These types of loans can be riskier for you because your asset can be seized if youre unable to pay off your loan. Additionally, despite being required to provide collateral, you will still be paying for the interest on your loan based on your creditworthiness.

    b. Unsecured Loans

    Unsecured loans do not require collateral. They can be a less risky option for you compared to secured loans but it is often at the expense of higher loan interest rates. The application process is also fairly simpler because there is no need to have any collateral to be appraised by the lender.

    Before a lender agrees to give you a loan, they will first assess your capability to pay it back. They will do this by looking at your credit history, current streams of income, and the viability of your business.

    Note that loans can be a combination of the two categories. For example, a loan can be both a term loan and a secured loan, meaning its a loan that disburses a lump sum amount and that requires collateral.

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