In the Philippines, starting a business is exciting, but securing finances may rapidly transform the excitement into a frightening challenge. Many small business owners hit a financial roadblock right at the beginning and ask, “How to fund a start-up business without any collateral?”

In traditional approaches, banks and lending institutions require assets like land or vehicles to secure a loan. But what if you don’t have any of that? In this blog, we will discuss the steps you can take to secure that start-up business loan, even without a single asset to pledge.

Why Lenders Say ‘Yes’ to Business Loans Without Collateral

You might ask, “If I have no property or assets, why would anyone lend me money?”. The answer to that lies in how lending has evolved. Although it may seem contradictory, an increasing number of lenders in the Philippines are providing business loans to start-ups without collateral. Why? Because they are shifting their focus beyond physical collateral to assess trust and potential.

Another thing, in order to be qualified to take a business loan, there should be a pre-existing business that’s operating to increase the chances of success.

1. Cash Flow and Transaction History Speak Louder Than Land Titles

These days, a lot of online lenders and fintech platforms look at your bank transactions, revenue information, or even e-wallet activity (GCash, Maya) to determine how often money comes into and goes out of your company. Even if you don’t own land, they will know you’re likely to repay if you’re making a consistent income.

For example, a sari-sari store owner using GCash or QR payment methods may be seen as more creditworthy than someone with zero transaction history but owns a small lot.

2. Credit Scoring Is Going Digital

Lenders pay attention if you have made on-time payments utilizing services like GCredit, Maya Credit, or even Buy Now, Pay Later (BNPL) applications, even if you don’t have a credit card or a solid borrowing history. Your digital credit profile is shaped by these small activities.

Tip: Repaying small loans early or on time improves your approval chances for bigger amounts.

3. Low Default Rates Among Microborrowers

Unexpectedly, microfinance organizations have learned that first-time borrowers without collateral frequently make better repayments than their wealthier clients. Why? Because they take the loan seriously, and it means everything to them. Because of this information, lenders are more inclined to believe in “unbanked” or low-income business owners.

4. Start-Up Loans Are About Potential

Your concept, your strategy, and your enthusiasm are crucial, particularly for government initiatives or lenders that cater to businesses. Some organizations provide loans based on the viability of your business rather than your current balance sheet.

Requirements for Approval: An Application Playbook

Applying for a loan is not just a one-time process. Of course, for lenders like Vidalia Lending Corp. to approve your loan, you MUST provide these requirements to support whether you’re eligible or not.

  • Two (2) Valid IDs (Passport, Driver’s License, SSS/GSIS, UMID, TIN, PRC, Postal ID)
  • Proof of Billing (Electricity or Water)
  • Valid Barangay Business Permit or Mayor’s Permit
  • Photos of the Store – inside and outside with the Owner
  • Record of Sales – Latest 3 Months

Aside from that, you will need to be Filipino, 21-59 years old with a minimum Net Monthly Income of ₱20,000.00, and the business must be operating for at least 1 year.

Common Pitfalls to Avoid

Many start-up business owners are rejected not because they don’t qualify, but because of avoidable missteps:

  • Applying without complete documents.
  • Asking for a huge amount right away.
  • Inconsistent income reporting, especially when all transactions are in cash.
  • Not understanding the Loan Terms.
  • Ignoring Personal Credit History
  • Poor Financial Management Post-Loan

Yes, Taking a Loan without Collateral is Available at Vidalia Lending Corp. 

Taking out a loan for the betterment of your business can never go wrong. At Vidalia Lending Corp., we have collateral business loans to cater to what your business needs. 

Don’t let the lack of assets stop you. Take that confident step towards upgrading your dream business. Apply now!