What are business loans and how can you apply for one

Every peso you borrow should move your business forward, not hold it back. The right business loan can make that difference.

Today’s businesses must stay vigilant for new challenges and opportunities. Access to funding can help businesses regularly reassess and recalibrate their goals and positioning to respond to the community’s needs.

This article covers what business loans are, why they matter, and how to apply for Metrobank’s business loans.

What are business loans?

A business loan is a type of commercial loan issued by a bank to an established enterprise. It is repaid within a fixed period and with interest. A business loan is used only for the company – to cover the costs of operating or growing a business.

How do business loans work?

Banks evaluate a business’s creditworthiness before providing a loan, which may be disbursed as a lump sum or a line of credit. The borrower agrees to repay the loan, plus fees and interest, over a specified period on a fixed amortization schedule.

Business loans may also require collateral—such as real estate that the bank may take possession of should the borrower fail to repay the loan. Otherwise, for unsecured loans, the business owner assumes personal liability if the business fails to repay.

Benefits and importance of business loans

Business loans have enabled established businesses to sustain operations and expand. Here are the benefits a business may experience when they avail of a business loan:

• Have control over the use of funds
• Improve cash flow management
• Access competitive interest rates
• Access funding when needed
• No need to share control of your business with investors

How to apply for a business loan

Each bank sets its own business loan requirements to assess a business's ability to repay. Use this checklist for getting a business loan with Metrobank before you apply: 

Personal and business identification

• Filled-out Business Loan Application Form
• One valid government-issued photo ID
• Business Registration Certificate or Permit
• Articles of Incorporation
• By-laws
• General Information Sheet
• Proof of Billing

Financial documents

• Income Tax Return (ITR) for the last three years
• Audited Financial Statements for the last three years
• Bank Statements from the last six months

Collateral documents

• Owner’s Duplicate Copy of Transfer Certificate of Title
• Certificate of Placement
• Tax Declaration
• Vicinity map, lot plan, and Bill of Materials for construction

*Additional documents may be requested.

Metrobank’s business loans

Whether you are sustaining daily operations or scaling to the next level, Metrobank's business loans are structured to match the financing needs of established enterprises.

Business loans for existing businesses

If you have an existing business and need funding for your operations, a Working Capital Loan may be the right solution.

This may be a suitable option for businesses that need a commercial loan on a recurring, short-term basis. It aims to sustain your business's daily requirements, such as gap financing for accounts receivable, purchasing supplies and inventory, and supporting operational expenses.

Business loans for expanding businesses

Metrobank offers several types of business loans to meet a range of financing needs.

For business expansion, starting a franchise, project finance, or capital expenditures—such as the purchase of new machinery or equipment, or the construction or renovation of commercial property—Metrobank's Term Loan offers financing that can be structured to match your cash flow. 

Disclaimer: This article is for general information purposes and does not constitute formal financial advice. Always do further research before making financial decisions and seek professional advice from a certified personal finance counselor.