There’s no denying that Small and Medium Enterprises (SMEs) play a vital role in the economic landscape of the Philippines.. These dynamic businesses contribute significantly to the nation’s GDP and employment, especially when it comes to providing opportunities for local communities.
According to the United Nations, SMEs make up 99.5% of business establishments in the country, provide 63% of employment to the country’s workforce, and contribute 40% to the country’s GDP.
Additionally, SMEs serve as hubs for new ideas and cutting-edge technologies which help to propel the country’s progress in various sectors. In fact, our research shows that compared to other investment vehicles, 27% of Filipinos prefer “starting their own business” as a method of investment..
Despite the importance of SMEs, these enterprises remain vulnerable to financial difficulties, especially during times of economic instability. For instance, close to 260,000 establishments closed in 2021, displacing a staggering 1.47 million employees.
This poses the need for a fast and reliable financing option for SMEs that can help them sustain their operations and overcome financial challenges. Fortunately, several online lenders in the Philippines offer a range of fast online loans for these types of businesses.
What are Online Loans?
Online loans are a type of financing option that allows borrowers to apply, receive, and repay their loans entirely online. This means that business owners can secure funding from the comfort of their homes or offices without the need for extensive paperwork or long processing times.
Benefits of online loans:
Online loans offer a range of benefits to SMEs, including:
Convenience
Online loans are convenient since business owners can apply, receive, and repay their loans from anywhere at any time. This eliminates the need for face-to-face meetings.
Speed
Online loans also have faster processing times compared to traditional loans, with some lenders offering same-day approvals and disbursements. This allows SMEs to access funding quickly so it’s ideal for emergencies.
Flexibility
Online lenders offer a range of loan options to suit different business needs and situations. These loans can be tailored to the specific requirements of SMEs, including repayment terms, loan amounts, and interest rates.
Accessibility
Business owners can apply for these loans using their smartphones or computers. This makes it easier for SMEs located in remote areas or those without easy access to traditional banking services to access financing.
Types of Online Loans for SMEs:
There are several types of online loans that SMEs can take advantage of, including:
Business Term Loans
These are traditional loans with a fixed interest rate and regular payments over a set period. They’re ideal for SMEs that need financing for long-term investments such as purchasing equipment or expanding their operations.
Business Line of Credit
This is a flexible type of loan that provides businesses with access to a set amount of funds that they can draw from. Business owners only pay the principal amount and interest on the funds they use so it’s a cost-effective option for managing cash flow.
Invoice Financing
This type of loan allows SMEs to access funds based on their outstanding invoices. Invoice financing is ideal for SMEs that need to bridge the gap between invoice payments and operating expenses.
Equipment Financing
This type of loan allows SMEs to finance new or used equipment for their business. This is extremely useful for SMEs that need to upgrade their equipment or machinery to improve their operations.
Criteria for Choosing an Online Loan Platform
When choosing an online loan platform, SMEs need to consider several factors to ensure that they select the best lender for their business needs. These factors include:
Interest rates
High-interest rates can significantly affect the overall cost of the loan, making it more challenging for SMEs to repay it. This is why comparing different lenders is crucial.
Loan amount
SMEs need to select a lender that offers loan amounts suitable for their financing requirements. Loan amounts can vary from lender to lender, so assessing the loan amounts available is an important consideration.
Repayment terms
Longer repayment terms may result in lower monthly payments, but it also means that SMEs will pay more in interest over time.
Approval time
Approval time is another critical factor when choosing an online loan platform, especially for SMEs that require funding quickly. Some lenders offer same-day approvals, while others may take longer.
Business owners need to consider their urgency and select a lender that can meet their timeline.
Loan processing procedure
SMEs should also select a lender that has a streamlined and efficient loan application process. This means that business owners can apply for the loan easily, submit the necessary documents online, and receive funding quickly.
A lender that has a complicated loan application process can cause delays and may not be suitable for SMEs that need funding urgently.
Customer service
Lenders must have a responsive and helpful customer service team that can assist SMEs with any questions or concerns. This is especially important in case of any issues that may arise during the loan application and repayment process.
Reputation and reviews
A lender with a good reputation and positive reviews is more likely to provide quality services and support throughout the loan process. Conversely, a lender with negative reviews and a poor reputation may lead to problems along the way.
Best Fast Online Loans for SMEs in the Philippines
We’ve gathered the top online loan platforms for SMEs in the Philippines that offer fast and convenient access to financing.
Tonik Flex loan
With its one-day approval, Tonik Flex Loan stands out as one of the best loans SMEs could apply for. This loan allows you to get up to P250,000 in funding with flexible repayment terms of up to 24 months. This loan also does not have hidden fees so business owners can accurately estimate their loan cost.
Loan amount: P20,000 to P250,000
Interest rate: As low as 1.7% per month
Loan terms: 6, 9, 12, 18, 24 months
How to apply:
- Download the Tonik App.
- Upload the requirements.
- Wait for a representative to call you.
- Your loan amount will be disbursed to your tonik account.
Uno Now
Need to take care of an urgent expense? The Uno Now can help. This loan has a low minimum amount so you won’t have to borrow more than what you need. Furthermore, you don’t need collateral to apply for it.
Loan amount: P10,000 to P200,000
Interest rate: As low as 1.79% per month
Loan Terms: 3 to 36 months
How to apply:
- Download the UNO app and register.
- Select “Loan account” and provide your details.
- Submit your loan application and requirements for credit valuation.
- Wait for your loan contract.
HomeCredit Loan
HomeCredit is a popular platform that offers cash loans that help individuals and businesses address their needs. One of the standout features of HomeCredit Loan is its fast disbursement process which allows business owners to receive funding in just one minute.
Loan amount: P3,000 to P150,000
Interest rate: 6 to 60 months
Loan terms: Starts at 1.83% per month
How to apply:
- Download the Home Credit app.
SeedIn
SeedIn is a business financing platform that helps local businesses get in touch with people looking for short-term investments. Because the platform is focused to help SMEs grow, you can get a higher chance of getting approved.
Loan amount: up to $2 million
Interest rate: 7% per annum
Loan terms: 3 to 12 months
How to apply:
- Complete the online application form to see if you qualify for the loan.
- Receive approval and get funds.
Security Bank Business Express Loan
This loan is amazing for businesses who need money to finance their short-term needs. It requires minimal documents, and offers fast approval and fund auto-crediting. If your loan amount is over P5 million, collateral is needed.
Loan amount: P500,000 to P5 million (unsecured)
Interest rate: 1.30% to 1.75%
Loan terms: 12 to 36 months
How to apply:
- Apply here.
Esquire Financing
With this non-collateral business loan, you can easily take your business to the next level. Approval for this loan takes one week, but it requires minimal requirements.
Loan amount: up to P10 million
Interest rate: 3.5% per month
Loan terms: up to 12 months
How to apply:
- Apply here.
UnionBank MSME Business Loan
This loan designed for SMEs offers competitive interest rates and flexible repayment terms. Approval for this loan takes up to five business days, but the application process is straightforward and streamlined.
Loan amount: P50,000 to P1 million
Interest rate: 3% per month
Loan terms: 3 to 36 months
How to apply:
- Visit the nearest UnionBank branch in your area.
RFC Business Loan
Whether you need to purchase more inventory, expand your business, or cover unexpected expenses, RFC Business Loan offers a solution for you. With flexible repayment terms and a quick approval process, this loan is perfect for business owners who need funding fast. To qualify for this loan, your business has to be operating for at least one year.
Loan amount: P10,000 to P3 million
Interest rate: 1.5% to 4% per month
Loan terms: 3 to 36 months
How to apply:
- Apply here.
Things to Consider Before Applying for an Online Loan
We’ve gathered some pointers to help you make an informed decision before applying for an online loan:
Understanding the business’s financial status and loan needs
It’s important to fully understand your business’s financial status and loan needs before applying for an online loan.
Make sure to review your financial statements, such as your income statement and balance sheet, to get a clear picture of your business’s financial health.
Determine how much funding you need and what you intend to use the funds for. This will help you choose the loan that best fits your needs.
Reading and understanding the terms and conditions of the loan
Knowing the terms and conditions of the online loan can help you avoid any surprises or hidden fees.
Take the time to read through the loan agreement and ask any questions you may have before signing. Take note of the interest rate, repayment terms, and any penalties for late payments.
Evaluating the ability to repay the loan
One of the first things you must consider before applying for an online loan is your ability to repay it. You don’t want to take on a loan that you won’t be able to pay back.
Analyze your business’s cash flow and ensure that you have enough funds to cover the monthly loan payments.
Also consider the length of the loan term and the interest rate. A longer loan term can mean lower monthly payments but higher interest rates in the long run.
Ensuring the security and confidentiality of the platform
Look for loans from reputable lenders with secure websites and data protection policies. This will help protect your personal and financial information from potential fraud or hacking.
Author Bio: MJ de Castro is the lead personal finance columnist at Grit PH. MJ started her career as a writer for her local government’s City Information Office. Later on, she became a news anchor on PTV Davao del Norte. Now, she juggles writing professionally, her business centering on women’s menstrual health, and surfing.
