Are you running a business in the Philippines? You may be wondering about how you can take any loans in this country. You can find a lot of types of loans that are available here. In this article, we are going to discuss taking any loans from banks and also online lenders. We will discuss some differences and similarities among those institutions.
Comparing both options will help you find the best option for your business. We are going to take a look at both banks and online lenders from many different aspects. By looking at these parameters, you can decide to choose the best one for yourself.
This is the first parameter that you want to take a look at. Most banks will offer a minimum loan which is around PHP 1 million up to 15 or 20 million. On the other hand, many online lending companies are ready to give up to PHP 10 million. Different lenders may have different requirements and loan allowances. You can contact some of those online lenders and banks, so you can compare all available loans that you can take in the Philippines.
Loan duration and also payment scheme
If your business needs to take a loan with a long repayment period, you may want to consider borrowing money from a bank. Most banks will offer short to medium-term loans for their customers. The loan can be repaid in about 1 – 3 years, or even 5 years. You will be charged for monthly payments until all loans are repaid.
On the other hand, online lending companies usually offer short-term loans for their customers. These loans may be available for about 2 weeks up to 1 year. Some companies offer bi-weekly or monthly payments for the interest and the principal. Most online lending companies also offer flexible payment options for their customers.
Before you take a loan, you also want to know the whole application process from both banks and online lending companies. In order to apply for a loan in the bank, you can go to the nearest branch to ask about all available loan options. Most banks will have their account managers or relationship managers who will handle the process of your loan application. It will take about 2 – 3 months for most banks to approve your loan.
If you want to get an easier loan option, you can go for online lending companies. The whole application process can be done online. You can do some steps, such as filling out the application form on digido.ph/articles/ofw-loan, submitting all necessary documents, getting your loan approved, and also getting a notification of the loan disbursement. These online lending companies can approve your loan in about 3 – 5 business days.
Business and documentary requirements
Most banks will require the business to be in operation for about 2 – 3 years with a year of profitable operation. Online lending companies don’t have this type of requirement. Some of them only require you to have at least a year of business operation. In terms of the documentary requirement, banks will ask for the original of all the documents for the loan application.
Online lending companies only require you to submit a photo or scanned copy of the documents. Some documents that you need to submit include an online application form, government IDs, SEC or DTI registration, BIR registration, mayor’s permit, proof of billing, checking account, bank statements, etc.
Interest rates and fees
Another important parameter that you have to take a look at is the interest rate. Banks will have a lower interest rate which is ranging from 0.5 to 1.5 % per month. They are able to give this low interest rate because they can get access to some cheaper sources of funds (including the deposits from the customers). Meanwhile, most online lending companies tend to charge a higher interest rate to the customers. They may also charge additional processing fees which will be around 1 – 2 % of the total loan amount.
Legitimacy and regulation
When we are talking about legitimacy, you can be assured of banks when you want to take a loan. All banks are officially regulated by the Bangko Sentral ng Pilipinas or BSP. The banks cannot operate in this country if they cannot comply with the policies and rules of the BSP. Online lending companies are not regulated by the BSP. They will be registered under the Securities and Exchange Commission or SEC.