Business loan - Bank loan vs Nonbank loan

Starting or growing a business in the Philippines often requires funding—whether it’s to maintain daily operations, increase stock, or expand services. For many local entrepreneurs and MSMEs, applying for a business loan becomes a practical solution to move forward.

In the Philippines, business owners typically choose between two financing options: bank business loans and nonbank business loans. Both aim to provide the capital needed, but they differ in terms of application process, approval time, and required documents. This article breaks down the key features of Bank and Nonbank Business loans to help you make a smart choice in today’s Business Loans Philippines landscape. 

Bank and Nonbanks Business Loans Comparison

When it comes to Business Loans Philippines, entrepreneurs often choose between bank business loans and nonbank business loans. Both offer funding support, but each type has different features, approval processes, and costs. Here's a simple guide to help you understand and compare your options.

Bank Business Loans

Traditional forms of financing offered by commercial banks.These types of loans often offer more affordable interest rates and extended payment durations. However, they often require complete documentation, good credit history, and collateral. Banks like BDO, BPI, and Landbank are popular providers of business loans in the Philippines. These are suitable for businesses with stable income and legal documents.

Nonbank business loans

Come from lending institutions outside the formal banking system—like financing companies, micro-lenders, and online platforms. They are more accessible and get approved quickly, but often come with higher interest costs and shorter payment terms. Some well-known providers in this space include PondoPinoy, First Circle, and Esquire Financing Inc.—all local nonbank lenders that offer fast and accessible financing solutions to Filipino MSMEs.

Table 1.1. Types of Business Loans Offered

Table 1.2. Comparison of Bank and Nonbank Business Loans Feature

Table 1.3. Loan Term & Interest Rate Sample Comparison

Tips Before Applying for a Business Loan

• Match the lender to your business size – Banks are ideal for established businesses; nonbank business loans are great for startups.

• Review your credit score – A higher rating can increase your approval odds for bank business loans.

• Borrow within your means – Make sure monthly payments fit your income flow.

• Compare rates and terms – Bank and Nonbank Business loans differ in cost and speed.

• Know your loan purpose – Choose a lender that fits your short- or long-term goal under Business Loans Philippines.
  

Conclusion

Understanding the difference between Bank and Nonbank Business loans is key to making the best financing choice.Bank business loans typically have lower interest costs, but they come with stricter document requirements and a slower approval process. On the other hand, a nonbank business loan provides faster access to cash, ideal for urgent needs, but usually comes with higher rates.

Before applying, assess your business needs, how urgent the funds are, and what documents you can provide. Always compare offers under Business Loans Philippines and read the terms carefully to avoid surprises. Make a careful choice, as the right loan can drive your business toward growth.