For many Filipino entrepreneurs, a business loan from a trusted institution like BDO Unibank is a crucial step toward achieving their company’s growth goals. BDO offers a wide range of loan products tailored to meet the diverse needs of small and medium-sized enterprises (SMEs), from funding a major expansion to managing day-to-day cash flow. Navigating the world of business loans can be complex, but with a clear understanding of BDO’s offerings and requirements, you can find the right financing solution for your business. This guide will provide a detailed overview of BDO’s business loan products and the steps you need to take to apply.
BDO’s Diverse Loan Portfolio for Businesses
BDO understands that a business’s financial needs are not one-size-fits-all. A company that needs to buy new equipment has very different requirements from one that needs to fund its payroll. For this reason, BDO offers a diverse portfolio of business loan products, each designed for a specific purpose. By matching your business’s needs to the right loan product, you can ensure a more effective and efficient financing solution.
Financing Long-Term Investments with a Term Loan
The BDO Term Loan is the bank’s primary product for long-term capital investments. This is the ideal option if your business needs a single, lump sum of money for a specific project with a long-term goal. The funds can be used for a variety of purposes, such as purchasing a new commercial property, constructing a new warehouse, or acquiring expensive machinery and equipment. The loan is disbursed in a single amount and is repaid over a fixed term of up to 10 years, with a structured monthly amortization. This predictable repayment schedule makes it easier to budget for the long term.
A key feature of the BDO Term Loan is its flexibility. The loan amount can range from ₱1,000,000 up to ₱50,000,000, or up to 70% of the collateral’s appraised value, whichever is lower. The collateral is typically the real estate property or the equipment being purchased, which helps the bank manage its risk. By using a term loan, your business gains a valuable long-term asset, which can be leveraged for future growth. The ownership of the asset also gives you full control over its use and maintenance, which is a major benefit for businesses that rely on their equipment for core operations.
The BDO Term Loan is best suited for established businesses that have a clear plan for expansion or a major capital expenditure. The bank will require a comprehensive business plan and a strong financial track record to approve the loan. The application process is more rigorous than for other loan products, as the bank needs to ensure that the business has the financial stability to support a long-term debt. However, for a business with a well-thought-out plan and a solid financial history, a BDO Term Loan is a powerful tool for achieving a strategic vision.
Ensuring Financial Flexibility with a Credit Line
In contrast to a term loan, the BDO SME Ready Check is a revolving credit line designed for a business’s short-term, recurring needs. It functions much like a credit card, providing your business with a pre-approved credit limit that you can draw from as needed. The principal you repay becomes available for you to borrow again, making it a flexible and convenient source of funds. This loan is a perfect tool for managing your business’s cash flow, paying for inventory, or covering a payroll shortfall during a slow season.
The main purpose of a BDO credit line is to provide financial flexibility and a safety net for your business. For example, if you need to buy inventory for a peak season, you can draw from the credit line and repay the amount once sales come in. You only pay interest on the amount you actually use, which makes it a cost-effective solution for day-to-day operational needs. The credit line is typically valid for one year and is subject to renewal, giving your business continuous access to funds without the need for a new application.
The BDO credit line is ideal for businesses that experience seasonal fluctuations in revenue or need a ready source of funds for unexpected expenses. It is an excellent tool for managing working capital and ensuring that your business always has the liquidity it needs to operate smoothly. While the interest rates may be slightly higher than those for a long-term term loan, the flexibility and convenience of a credit line are invaluable for maintaining financial health. BDO also offers specialized working capital loans like the Working Capital Loan and Inventory Financing with Trust Receipt (IFTR), which are also designed for short-term liquidity needs.
The Application Process and Requirements
Once you have identified the right BDO business loan product for your needs, the next step is to prepare for the application process. BDO has a standardized set of requirements that all business loan applicants must meet. By having a clear understanding of these requirements and preparing all the necessary documents in advance, you can ensure a smooth and efficient application process.
Eligibility and Document Requirements
To qualify for a BDO business loan, you must be a Filipino citizen between the ages of 21 and 70 (at the end of the loan term). Your business must have a stable source of income and be within a BDO serviceable area. BDO also requires the business to have a minimum annual gross sales of ₱1,000,000. This demonstrates that the business is financially viable and has a track record of consistent revenue. For a business owned by an employed individual, a minimum monthly gross income of ₱50,000 is also required.
The documents you need to submit will vary based on your business’s legal structure. For a sole proprietorship, you will need to provide your DTI Business Registration and a clear photocopy of your Audited Financial Statements for the last two years. For a corporation or a partnership, you will need to provide your SEC Registration, Articles of Incorporation, and By-Laws. All applicants, regardless of their legal structure, must also submit their latest Income Tax Return (ITR) and bank statements for the last six months. These documents are crucial for the bank’s financial review and due diligence.
If you are applying for a Term Loan that requires collateral, you will also need to provide the necessary documents for the real estate property. This includes a clear copy of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) and the latest tax declaration. BDO’s requirements are in place to ensure that the bank is lending to a legitimate and financially sound business. By having all of these documents prepared in a single folder, you can show the bank that you are a serious and responsible borrower.
The Step-by-Step Application Process
The application process for a BDO business loan is straightforward. The first step is to visit a BDO branch or a BDO Business Center and speak with a loan officer. They will provide you with the application form and a detailed checklist of requirements. You can also start the process by visiting the BDO website, which provides information on different loan products and their corresponding requirements. BDO has also announced a new Multipurpose Loan which has an online application option, making the process even more convenient.
Once you have gathered all the required documents and filled out the application form, you will submit them to the loan officer. The bank will then conduct a rigorous credit evaluation and due diligence. This includes a review of your business’s financial records, a credit check, and, in some cases, a site visit to your business premises. The bank may also contact your suppliers or customers to verify your business operations. This process can take anywhere from a few days to a few weeks, depending on the complexity of your application.
If your loan is approved, you will be notified by the bank, and you will sign the loan documents. The loan proceeds will then be released to your BDO bank account. BDO offers an option for an auto-debit arrangement, which will automatically deduct your monthly payments from your bank account on your due date. This is a convenient feature that ensures you never miss a payment. The entire process, from application to disbursement, is designed to be as seamless and efficient as possible, allowing you to get the funds you need to grow your business.
Conclusion
BDO provides a comprehensive and flexible range of business loan products that cater to the diverse needs of Filipino entrepreneurs. By understanding the purpose and requirements of each loan—from the strategic Term Loan to the flexible Credit Line—you can make an informed decision that aligns with your business goals. By preparing your documents in advance and choosing the right product for your needs, you are taking a crucial step toward securing the funding you need to take your business to the next level.
