Types of Business Loans in the Philippines You Should Know About
So your business is short of money and you can’t produce more products and services? No problem. In times like these, there are many lending institutions you can count on as long as you can prove to them that you can pay them and you have the necessary paper requirements they need from you.
But before you rush for a loan, you should first know some things. What are the types of loans in the Philippines? What are the terms available for you? And last but not least, when is the day you start your loan interest with the lending company
Secured Business Loan
This is first one among the types of business loans wherein the lender needs to make collateral to the lender. This could be a land title, car certificate ownership, a certificate of ownership for a condominium unit, or a bank certificate.
The secured business loan has its pros and cons. On the Pros side, this type of loan can offer a great amount of loan value with little interest as there is a collateral.
The Con side of this loan, however, is the feeling of uncomfortableness it brings especially when the lender is not willing to make collaterals. There are also times when we need these collateral papers for some reasons like applying for a US Visa to prove that we have a certain property.
There are Two Types of Secured Business Loan. These are the following:
The collateral is usually the certificate of business ownership. However, lending companies may require some other forms of collateral.
The term of the loan could range from one year to fifteen. Similarly, the amount of the loan could be from 100,000 PHP to 10,000,000 PHP.
The day of your loan interest starts on the next day of your loan release. The process of loan is simple. Just fillup the application form for lending and submit the required necessary documents to process the loan application.
This type of loan is a secured business loan where the lender is given some credit line which he can use anytime he wants. It works like a credit card where you simply have to swipe it in order to use it. It’s not exactly the process but it works like that.
Not like the Term Loan, the process for this type of loan is different. The privilege for Credit Line is given to certain business owners who will apply to them and pass their screening. The term of the loan could range from one month to one year or it could be extended depending on the lender, and the amount of the loan could be from 500,000 PHP to 20,000,000 PHP.
One of the good features of the Credit Line is its flexibility. The lender can simply use his Credit Line anytime he wants and whatever amount he needs. It’s up to him whether he wants to pay right away after a month or on the 12th and last month as long as he pays the monthly interest. Just like the Term Loan, the day of your loan interest starts on the day you were granted a loan.
Unsecured Business Loan
These are the types of Business Loans wherein the lender needs to make no collateral to the lender. This is risky on the part of the lender so, in order to compensate for the situation, the lender usually charges a higher interest rate to borrowers within a short term.
Just like Secured Business Loan, Unsecured Business Loan has its Pros and Cons. On the Pros side, lenders can loan a certain amount of money in an easy way and with a few or no documents at all except your ID.
On the Cons side, however, it brings the lender in the pain of paying a huge amount of interest.
If you’re thinking of availing of any Types of Business Loans in the Philippines, we at 3E Accounting would like to help. We’re among the best Philippine business startup experts. Contact Us for more information.