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4 Types of Business Financing in the Philippines: What to Choose Besides Government Loans

Money is the lifeblood of a business and sometimes you don’t have enough capital to start up a business. Hence, business financing was raised as a funding option for business owners. There are several types of business financing available from government loans to bank loans. It is worth noting that each type of financing has its advantages and disadvantages.

With that being said, business owners must heavily manage cash flow to ensure a fast return on investment (ROI). Some of the expense items as you start out include:

  • Supplies and inventory while waiting to get paid
  • Payroll and rent
  • Equipment and fixtures
  • Buying the business

This list can be overwhelming, but fear not, because there are a variety of options and techniques that you can use in your search for financial assistance for your business.

Learn how to find, negotiate and maintain sources of funding to help you start and grow your business.

Bank loan

Traditional bank loans are often the first choice for business owners looking for financing.  Despite the strict requirements, this option is preferred over government loans as banks allow bigger amounts for loans.

A good credit line, a personal guarantee, collateral, and a good credit rating are all required by banks when applying for a loan. There’s also the time-consuming application process. An application’s entire lifecycle, from submission to approval, could take months to complete.

Once your application is approved, depending on the loan amount and your credit history, Philippine banks typically offer repayment terms ranging from 6 to 48 months for business loans. In some cases, banks offer up to 60 months. 

Indeed, long repayment terms are ideal for large capital expenditures that also serve as collateral for the loan, which is why banks offer them. Banks want to know that your company is well-run and has a steady stream of revenue.

To apply for a bank loan, you can physically visit the local branch nearby or visit the website of your chosen bank for contact details. There are other banks that also offer online applications.

P2P Lending

There are some businesses that don’t need large loans. Hence, banks frequently deny small-business loans because the borrowers aren’t asking for enough money. With this dilemma, peer-to-peer (P2P) lending became a trend. It has served as an option for raising capital where lenders have started offering microloans, which have smaller loan amounts and shorter repayment terms. 

P2P lending is more inclusive compared to bank and government loans as businesses with low credit scores, no credit history, or who have never received a bank loan may be beneficiaries.However, P2P is an unsecured loan. This is risky for both the investors and borrowers.

Typically, you may sign up on a peer-to-peer lending platform online. During the process, business owners are required to provide necessary information. Different platforms have different policies when it comes to approval of applications. 

Some of the P2P lending platforms in the Philippines that may serve as an alternative to government loans are:


Given that peer-to-peer lending platforms are unsecured, you might be hesitant to sign up. Well, another form of lending which is also made possible by the internet is crowdfunding. It’s a lot like P2P platforms but without marketplace lending.

Crowdfunding platforms are less stringent when it comes to requirements and offers a safer way to raise funds for your business. For example, Airfunding is an online crowdfunding platform supported here in the Philippines. In just 5 minutes, you can easily set up a project and reach over 10 million potential supporters to help you with financing your business.

Brenda, owner of In the Mix Bali, is a testament of how Airfunding helped her out to purchase additional equipment for their home bakery business after being affected by the pandemic. Read more about Brenda’s project and learn about how Airfunding can be your partner as you look out for alternatives to government loans.

Start with Airfunding now! 

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