Explaining The Types Of Business Loans

May 24, 2023
Read Time 5mins

*Advice given in this article is general only and may not apply to you. Always speak with a financial expert if you have questions about your circumstances. Content correct and up to date at time of publishing, May 2023.

If you are self employed or own a business, or are wanting to start your own business, the best way to get cash flowing is with a business loan. There are lots of reasons you might need a business loan and there are different ways to use them in your business.

What is a business loan?

The phrase “business loan” is an umbrella term used to refer to a loan that’s used specifically for your business’s benefit. There are many different types of business loans you can get depending on your needs. In fact, every bank offers different types of business loans, and a lot of them sound mighty similar! There can even be a lot of crossover between loans which make it hard to tell which one is right for you.

It’s important to shop around and do your research to find the best loan for your desired purpose. Here are a few different loans offered by banks in Manila.

BDO

The largest bank available, BDO has a wide range of loans that are flexible enough to suit your business needs.

Term loan

A loan for 1-5 years long, and recommended for:

Purchase of new assets such as machines and equipment
Acquisition of real estate properties
Construction, repair and renovation of business facilities

SME Ready Check

A short term loan for 1 year with a high loan amount, recommended for:

Buying inventory or supplies to address seasonal or bulk orders
Working capital to address operational requirements
Paying suppliers while waiting for customer collection

Project Finance loan

A big loan for big corporations, recommended for:

Expanding facilities
Expanding products
Greenfield projects
Providing public infrastructure like railways and toll roads

Working Capital loan

A short term loan for 1 year recommended for:

One-time payments
Post-dated checks discounting
Supplier payments
Pre or post-financing requirements

BPI

With 4 types of business loans on offer, BPI also has a loan with a special offer for commercially-used real estate.

Ka-Negosyo Credit Line

A short term loan with a high loan maximum amount, recommended for:

recurring business expenses such as inventory
employee salaries
utilities
equipment maintenance
delivery costs

Ka-Negosyo SME Loan

A long term loan up to 5 years recommended for:

expanding product lines
purchasing new equipment
meeting other capital expenditures

Ka-Negosyo SME Loan for Property

A long term loan up to 10-20 years with a high loan maximum, only to be used for:

acquiring or constructing property assets for your business

Ka-Negosyo Ready Loan

A short term loan up to 6 months, recommended for:

seasonal funding needs

Metrobank

The widest range of business loans on this list with 5 options to choose from to suit your business.

Puhunan Loan

buy inventory, gap receivables, or finance payables
purchase property and/or construct or upgrade facilities
Manufacture goods.

Agri Business Loan

Purchase equipment and/or machineries for the processing, manufacturing, and distribution of agri-products.
Increase working capital to purchase additional inventories and manage receivables.
Build or upgrade facilities like warehouses, solar and mechanical dryers, and processing plants and buildings.

Franchise Business Loan

get capital for a franchise of their chosen brand
purchase of machineries, equipment and site construction
procure extra inventory and supplies needed

Working Capital Loan

financing on a recurring but short-term basis
aims to support business’ daily requirements such as gapping of trade receivables, purchase of supplies and inventory, and support operational expenses
finance working capital requirements through 30- to 360- day promissory notes

Term Loan

Short, medium, or long term loan uniquely structured based on your financial needs and business cash flows
procure much-needed equipment to get their business off the ground
construct new buildings or warehouses

Security Bank

Keeping things simple, Security Bank has 2 options for a prospective lender, plus automobile financing.

SME Business Express Loan

A short term loan best used for:

equipment, office spaces, or cash for day-to-day operations.

Business Mortgage Loan

A long term loan of up to 20 years best used for:

growing businesses that are looking to make big purchases or investments to scale up
property acquisitions or working capital

Auto Fleet Financing

For more than 1 vehicle up to a total of P8M

Car or Truck Loan

For a single vehicle up to 70% of the total purchase price

What's the final take away?

This list is not exhaustive but is instead used as an example of the variety of business loans available to you. Remember that what makes a good loan is entirely dependent upon your situation and finances.

You might be better going with a bank that has a specialised loan for your industry, like an agri-business loan. Or, you might prefer to have a general loan like a term loan. Both loans will get you the funds you need, they just have different requirements!

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Finding a great bank is not just about low-interest rates. You also want a bank that treats you well and doesn’t hide their fees. So whether you’re buying a house for the first time or have done this before, we’ve got some great information for you.

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If you’re planning to buy a home and need a loan, this article could literally save you hundreds of thousands over the life of your mortgage—so make sure to read through and bookmark it if needed!

Empowering Dreams, Enriching Lives.

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Helpful Information

*This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information and if necessary, seek appropriate professional advice. Interest rates displayed are dependent on qualifying for a home loan with your chosen Bank. We cannot guarantee clients will avail the advertised rate.