Negosentro | Best E-commerce Business Loans in the Philippines | The e-commerce industry has experienced a massive transformation in recent years. In fact, it’s projected to be worth $18.16 billion in 2023.
In many ways, e-commerce has revolutionized how people shop and how Filipino entrepreneurs do their business. However, building or expanding an e-commerce business requires more than just a brilliant idea and an amazing website.
As the industry becomes more competitive, businesses must stay ahead of the curve and innovate. Securing financial resources is a critical aspect of this journey.
This is where business loans come into play. These loans act as a lifeline for e-commerce entrepreneurs who want to expand their product offers, boost their marketing efforts, and invest in technology upgrades.
In this article, we will explore some of the best e-commerce business loans available in the Philippines.
Typical Capital Constraints for E-Commerce Businesses in the Philippines
These are just a few examples of the many challenges e-commerce businesses face in the Philippines.
Inventory Management
E-commerce businesses must ensure that they have enough inventory to meet demand, while at the same time avoiding overstocking and tying up valuable capital.
Operating expenses
These expenses include costs such as website maintenance, shipping fees, salary, and warehouse rent, among many others.
Seasonal Fluctuations
As with any business that sells products, demand can vary depending on the time of year.
Marketing
In a competitive market like the Philippines, it can be difficult for businesses to stand out. E-commerce entrepreneurs must invest in effective marketing strategies to attract customers and drive sales.
Inefficient Payment Processing
Payment gateways and banks often charge high fees for processing transactions, which can eat into profits and cash flow.
Understanding Business Loans in the Philippines
We’ve gathered the different types of loans you can apply for to help your business.
Short-term loans
Short-term loans are ideal for businesses with urgent needs. These loans typically have a repayment period of six months to a year and can provide quick access to capital.
Long-term loans
Long-term loans provide e-commerce businesses with greater flexibility and stability. These loans typically have a repayment period of one to five years and offer lower interest rates than short-term loans.
SME loans
SME loans, or small and medium enterprise loans, are specifically designed to support small businesses in the Philippines. These loans offer a range of financing options to help e-commerce entrepreneurs grow their businesses.
Microloans
These loans typically have a low borrowing amount and a short repayment period, making them ideal for e-commerce businesses that need a small amount of capital to cover expenses or invest in new products.
When it comes to choosing between these loans, borrowers must also consider several factors to ensure the loan will cater to their unique needs.
Collateral requirements
Some lenders may require collateral to secure the loan. Meanwhile, other lenders may offer unsecured loans, which do not require collateral. However, these loans usually have higher interest rates.
Eligibility requirements
Lenders may also require borrowers to have a certain credit score, minimum annual revenue, or a specific number of years in business. It’s important to review these requirements to ensure that you meet them before applying for a loan.
Interest rates
Higher interest rates can significantly impact a business’s cash flow, while lower interest rates can provide businesses with more financial flexibility.
Repayment terms
The repayment period and frequency of payments can vary between different lenders and loan types. You must always consider the repayment terms and ensure that they align with your business’s cash flow and financial goals.
Top E-Commerce Business Loans in the Philippines
Here are the top e-commerce business loans available in the Philippines.
Tonik Flex Loan
This is probably the most convenient online loan you can apply for in the country right now. You can borrow as much as P250,000, repayable in installments over a period of up to 24 months. Plus, the loan approval process is swift and can be completed within 24 hours.
Loan amount: Up to P250,000 million
Loan terms: Up to 24 months
Interest rates: The lowest interest rate is 1.7% per month
How to apply:
- Download the Tonik app and complete the onboarding process.
- Get pre-approved for the Flex Loan on the app.
- Upload the required documents on the app.
- Expect a call from the Tonik credit team.
- Visit the Tonik Hub for the final steps, including submitting the rest of your requirements.
First Circle
With First Circle, you can get a business loan in just one day when you open a non-collateral credit line of up to P20 million if you earn more than P200 million annually.
You only need to pay for the credit you use and get rebates for early repayment. When you apply for this loan, you will also have a dedicated contact person to assist with applications and withdrawals.
Loan amount:
Business revenue >₱200 million: ₱10 million to ₱20 million
Business revenue ₱15-200 million: ₱1 million to ₱10 million
Business revenue<₱15 million: ₱250,000 to ₱2 million
Loan terms: 1, 3, 6, and 12 months
Interest rates:
0.99% monthly interest for P10 million to P20 million
1.29% to 1.495 monthly interest for P1 million to P10 million
2.39% to 2.49% monthly interest for P250,000 to P2 million
How to apply:
- Apply online by completing the online application form. You will receive a call after one business day.
- Submit the requirements.
- Use your credit line.
Blend PH Business Loan
BlendPH offers a low-interest loan for entrepreneurs who need additional capital. This is made possible by BlendPH lenders and Right Choice Finance.
Loan amount: P100 to P2 million
Loan terms: 6 to 36 months
Interest rates:
Risk Type A: 1.5%/month
Risk Type B: 2%/month
Risk Type C: 3%/month
How to apply:
- Create a Blend PH account.
- Wait for the team to process and verify your information and requirements.
- Wait for a lender to fund your loan.
Esquire Financing
This loan is perfect for small businesses that require quick funding. Esquire Financing offers unsecured loans with no collateral requirements, making it easier for businesses to apply. The loan also has flexible repayment terms to help businesses manage their cash flow better.
Loan amount: Up to P10 million
Loan terms:3 to 6 months
Interest rates: 3.5% per month (may vary)
How to apply:
- Fill out the application and wait for a confirmation.
- Submit the requirements.
- Claim your business loan after 7 days.
SeedIn
SeedIn is a peer-to-peer lending platform that helps connect investors to small and medium-sized enterprises (SMEs) in need of funding. With SeedIn, you can get your money in less than a week.
Loan amount: $2 million
Loan terms: 3 to 2 months
Interest rates: 7% per annum
How to apply:
- See if you qualify for a loan. If so, complete the online application form.
- Wait for a team member to contact you to discuss your application and loan options.
- Receive approval.
RFC Business Loan
The goal of this loan is to help small and medium businesses reach their potential. RFC understands that every business has unique financial needs, which is why they offer customized solutions to help you achieve your goals.
Loan amount: P10,000 to P5 million
Loan terms: 3 to 36 months
Interest rates: varies depending on the risk tolerance
How to apply: Apply here.
Vidalia
Whether you need new equipment, additional inventory, or working capital, Vidalia can help fund your business needs. Their loan process is straightforward and transparent, ensuring that you have access to the funds you need quickly.
Loan amount: P100,000 to P500,000
Loan terms: 2 to 12 months
Interest rates: 4% per month
How to apply:
- Answer questions about your business upon loan application.
- Get your loan check or wait for the amount to be deposited in your bank.
GrabFinance
GrabFinance lets you fund your dream business thanks to its hassle-free and affordable business loan.
Loan amount: P50,000 to P499,000
Loan terms: 12 months
Interest rates: as low as 1.49%
How to apply:
Fill out the application form here.
SBCorp Rise Up
This is a multi-purpose loan that helps MSMEs who need additional working capital or funding for expansion. SBCorp Rise Up offers flexible repayment terms and competitive interest rates to make sure that businesses can focus on their growth.
Loan amount: Up to P300,000
Loan terms: 3, 6, 9, or 12 months
Interest rates: not available
How to apply:
- Create an SB Corp account.
- Provide your personal and business profile
Eligibility Criteria for E-Commerce Business Loans
The eligibility criteria for e-commerce business loans can vary depending on the lender, but there are some general requirements that most lenders will look for. These include:
Business age
Most lenders will require that your e-commerce business has been in operation for a certain period, usually around 6 to 12 months.
Revenue
Lenders will want to see that your e-commerce business is generating a consistent revenue stream. This helps them to determine your ability to repay the loan.
Credit score
Your personal and business credit scores will be evaluated to determine your creditworthiness. A higher credit score can increase your chances of loan approval.
Business documentation
Lenders will also require certain business documents to verify your business’s information and financials. This can include tax returns, bank statements, and business licenses.
Tips On How to Increase the Chances of Approval
We’ve gathered a few tips you can follow to increase your chances of approval for your loan application.
Increase your revenue
Work to increase your e-commerce business’s revenue by implementing new marketing strategies or expanding your product offerings.
Prepare your documentation
Ensure that your business documents are up-to-date and accurate. This can include tax returns, bank statements, and business licenses.
Choose the right lender
Research lenders to find the one that best fits your e-commerce business needs. Look at their loan terms, interest rates, and eligibility criteria to see if they align with your goals and financial situation.
Have collateral
Offering collateral can increase your chances of loan approval as it reduces the lender’s risk. This can include business assets such as real estate or equipment.
Challenges and Risks That Come with A Loan
Taking out a loan for your e-commerce business can certainly help you achieve growth and success, but it’s important to be aware of the challenges and risks that come with it.
One of them is the potential for high-interest rates. Depending on the lender and your creditworthiness, you may end up paying a significant amount in interest on top of the principal loan amount.
Another risk is the possibility of defaulting on the loan. If you are unable to make your loan payments on time, the lender may take legal action and seize your collateral. This can be detrimental to your business’s operation and overall success.
To manage these risks, it’s important to carefully consider your business’s financial situation and ability to repay the loan before taking it out.
You should also have a solid plan in place for how you will use the loan proceeds and ensure that your revenue stream is consistent enough to cover the loan payments.
Additionally, it’s important to work with a reputable lender that offers transparent loan terms and fair interest rates. Take the time to research potential lenders and read reviews from other business owners who have taken out loans with them.
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.
