Small and Medium Enterprises (SMEs) form the backbone of the Philippine economy, contributing to 63% of the total employment and 35.7% of the nation’s GDP. These businesses are key drivers of employment, innovation, and local economic growth.
However, despite their importance, many SMEs face a critical challenge—accessing the financing they need to grow and sustain their operations. Traditional financing methods often present barriers, including high interest rates and stringent collateral conditions, leaving borrowers to struggle with limited funding options.
In this article, we will explore the various SME loan options offered by BDO, one of the leading banks in the Philippines, and how these can provide the financial support needed for businesses to thrive.
TL;DR
- BDO offers various SME loans, including term loans, credit lines, and express loans, catering to different business needs.
- Loan amounts and terms are flexible, based on your business's cash flow and goals.
- The application process is simple, requiring key documents, with fast approval and disbursement.
Types of SME Business Loans Offered by BDO
BDO provides a range of loan products tailored to meet the diverse financial needs of SMEs in the Philippines. These loans are designed to help businesses with everything from daily operations to long-term growth strategies.
In fact, SMEs account for 99.5% of all registered businesses in the country, according to the Department of Trade and Industry (DTI), and BDO aims to help these businesses thrive. Below are the main types:
1. Term Loan
This option provides lump-sum financing, enabling businesses to acquire property, major equipment, or other significant business assets. It is ideal for long-term investments and asset acquisitions.
Key Features:
- Funding Range: ₱1 million to ₱50 million (depending on collateral and income)
- Structured repayment plans that align with business cash flows
- Ideal for strategic expansions and acquisitions
2. Business Credit Line
A revolving credit facility provides ongoing access to funds for businesses to manage operational expenses or working capital needs.
Key Features:
- Flexible: Draw funds as needed for short-term cash flow management
- Helps businesses cope with fluctuating operational expenses
- Ideal for industries with seasonal demand or cash flow variations
3. SME Ready Check
Tailored for businesses with dynamic cash flows or seasonal demand peaks, this product helps maintain liquidity and cover day-to-day operational expenses.
Key Features:
- Loanable Amount: ₱3 million to ₱50 million
- Designed for industries with fluctuating cash flows, like manufacturing and trading
- Ensures liquidity for operations during seasonal peaks
4. Express Business Loan
This loan option is designed for quick turnaround financial applications, ideal for businesses needing immediate funding.
Key Features:
- Quick disbursement: Ideal for urgent financial needs
- Fast approval process to seize immediate opportunities
5. Business Credit Plus
A larger funding option with flexible terms, perfect for businesses undertaking significant projects or expansions.
Key Features:
- Larger funding potential for major projects
- Flexible terms and repayment schedules
6. Specialised Loans (Smart Salary Loans or Solar Financing)
These loans address specific needs, such as facilitating salary advances for employees or funding renewable energy investments.
Key Features:
- Smart Salary Loans: For employees requiring salary advances
- Solar Financing: For businesses investing in renewable energy solutions
BDO’s offerings are particularly compelling because they address sector-specific needs. Loan packages can be customised for industries such as agriculture, manufacturing, or services, with varying collateral requirements and adaptable repayment schedules.
Eligibility Requirements for BDO SME Loans
To qualify for a BDO SME loan, businesses must meet specific eligibility criteria. These requirements are designed to ensure that the business is financially stable and capable of repaying the loan.
BDO focuses on businesses that have a solid operational track record and demonstrate the ability to manage financial obligations effectively. Here are the eligibility requirements for BDO SME loans:
Business Registration
BDO requires businesses to be formally registered with the relevant government agencies. This ensures that the business is operating legally and in compliance with the necessary regulations.
1. Sole Proprietorships and Self-Employed Requirements
- Showcasing audited financials
- DTI registration
- Six months of bank statements
- The most recent ITR
2. Partnerships and Corporations Requirements
- SEC registration documents
- Articles of Incorporation
- Similar financial documents of sole proprietorships
Additionally, for tax compliance, businesses must also be registered with the Bureau of Internal Revenue (BIR)
Financial Stability
BDO evaluates a business's financial stability, including cash flow, profitability, and debt management. Businesses with a strong financial track record and consistent revenue streams are more likely to qualify for larger loan amounts and favourable terms.
- Annual Gross Sales: Minimum ₱1 million in gross sales.
- Credit History: A clean credit history is preferred, but businesses with some credit issues may still qualify for certain loans.
Industry Type and Business Age
BDO considers the nature of the business and its years of operation. Established businesses in stable industries are often prioritised, but BDO also provides options for newer businesses with strong growth potential.
- Business Age: At least two consecutive years of profitable operations.
- Industry: BDO offers loans to a wide range of industries, including retail, manufacturing, healthcare, and more.
Additionally, the business owner must be between 21 and 70 years old by the end of the loan term.
Application Process for BDO SME Business Loans
Applying for a BDO SME loan is a straightforward process. BDO aims to make the application experience as seamless as possible, ensuring that SMEs can access the funds they need quickly and efficiently.
1. Initial Loan Consultation
The first step is to consult with a BDO loan officer to discuss the loan options that best suit your business needs. This consultation will help clarify the amount of funding required, the type of loan, the repayment terms, and the eligibility criteria.
2. Prepare Required Documents
Once the loan type is chosen, businesses must prepare the necessary documents, including:
- Business registration certificates (DTI, SEC, or BIR).
- Financial statements (balance sheets, income statements).
- Proof of business address.
- Tax returns for the past year or two.
3. Submit Application
After gathering the required documents, businesses can submit their loan application online or at a BDO branch. The application will be reviewed by BDO’s loan officers, who will assess the financial viability of the business.
4. Loan Review and Approval
After submission, BDO will review the application, assess the business’s creditworthiness, and verify the provided information. This step may take 3-7 days, depending on the complexity of the loan application.
5. Loan Disbursement
Upon approval, funds will be disbursed within 1 to 3 days according to the agreed-upon terms. This can be done through a bank transfer or cheque, depending on the business's preference.
Interest Rates and Repayment Terms
BDO offers competitive interest rates and flexible repayment terms tailored to suit the needs of SMEs. The rates and terms depend on the type of loan, the business’s financial profile, and the loan amount.
Interest Rates
Interest rates for BDO SME loans are generally lower compared to traditional lenders, with rates starting at around 7% per annum. Key points to note include:
- Annual Repricing: Rates are adjusted each year based on market conditions.
- Fixed Interest Rates:
- 7.00% for a 1-year term.
- 8.25% for a 5-year term.
Collateral-based loans may qualify for lower rates, starting at 6.25%.
Additional fees, such as the Documentary Stamp Tax (DST), apply, which vary based on the loan product and disbursement method.
Repayment Terms
BDO offers flexible repayment terms, allowing businesses to choose a plan that best aligns with their cash flow.
- Term Loan: Fixed monthly payments over up to 10 years.
- SME Ready Check: Revolving credit with an annual term and renewal option, suited for businesses with fluctuating cash flows.
Repayment schedules can be customised to align with the business’s cash flow. Some loans also include grace periods of up to one year.
Why SMEs Across the Philippines Choose n90 Over Other Traditional Lenders?
BDO offers a wide range of business loans; however, many SMEs struggle with documentation, lengthy approval times, or rigid requirements. That’s where n90 comes in. We offer fast, flexible financing and expert support to help you stay funded while navigating, or even avoiding, the complexities of traditional bank loans.
Here’s how we can support your growth:
- Bridge Loans: Fast-track funding for urgent needs like supplier payments or expansion opportunities. No long waits, just quick liquidity with transparent terms.
- Invoice Financing: Convert Unpaid Receivables into Working Capital. Ideal for SMEs managing long payment cycles or seasonal fluctuations.
- Small Business Loans: Borrow up to ₱25 million with custom repayment options. Whether you’re upgrading equipment or launching a new product, we make funding accessible and flexible.
With n90, you don’t have to wait weeks or stress over red tape. We simplify your access to business financing that better suits your cash flow needs.
Conclusion
BDO offers a diverse range of SME loan products, tailored to meet various business objectives—from daily working capital to long-term expansion. However, navigating the application process and selecting the right loan can be challenging without the right guidance.
That’s where n90 steps in. We help SMEs like yours simplify complex banking processes, assess financial readiness, and choose the loan that truly fits your growth strategy. Whether you're considering a BDO loan or exploring faster alternatives, our team ensures you make confident, informed decisions.
Ready to grow your business with the right funding partner? Get in touch with n90 today at +63 962 663 1393 and let us help you secure a loan that fuels your vision.
FAQs
Q. What is an SME loan in the Philippines?
Ans. An SME loan in the Philippines is a financial product designed to support small and medium enterprises (SMEs) by providing capital for business expansion, operational costs, or other needs. Banks and financial institutions offer these loans to help SMEs grow and sustain their operations.
Q. What is the limit of an SME loan?
Ans. The limit of an SME loan varies depending on the lender, type of loan, and the business's financial standing. Typically, the loan amount ranges from ₱100,000 to ₱10 million, with varying repayment terms tailored to the business's requirements and creditworthiness.
Q. What is the difference between an MSME loan and an SME loan?
Ans. The primary difference between MSME (Micro, Small, and Medium Enterprises) loans and SME loans lies in the size and scale of the business. MSME loans cater to micro and small businesses, which typically have lower capital requirements, while SME loans are generally for medium-sized enterprises with higher funding needs.
