Embarking on the journey of starting a business can be an intimidating endeavor as there are numerous obstacles that must be overcome. Although a solid business plan is essential for the triumph of the enterprise, obtaining funding is one of the most critical factors that contribute to a prosperous business.

Small and medium enterprise loan companies have made applying for business loans easier by providing online access and extensive knowledge of business financing.

However, make sure to take into account alternative business finance options that are appropriate for your company’s needs before moving forward with your loan application. We’ll provide you with some tips in this article to assist you in comprehending the nuances of business finance.

SMEs in the Philippines

Small and medium enterprises (SMEs) have been identified by the Asian Development Bank as the mainstay of Asian economies, comprising 98% of all enterprises and 66% of the national labor force between 2007 and 2012.

In the Philippines, any enterprise with 10 to 199 employees and/or assets valued from P3 million to P100 million is considered an SME. These micro-businesses make up 99.6% of all businesses in the country.

Business Financing Strategies

Here are some of the financing strategies that you could consider for your business venture: 

Raising Business Capital From Banks

In the Philippines, a mere 20% to 40% of all registered businesses have the privilege of accessing bank loans. This may be attributed to the strict collateral prerequisites, extensive documentary requirements, and lengthy application process. If you happen to be one of the fortunate few who have access to bank loans, there are certain things to take into consideration: 

  • Source of Income: Banks consider your loan repayment ability based on income. Higher loan amounts may require additional income proofs.
  • Credit History: Having a poor credit history might affect your loan application. Work on settling any outstanding loans or debts first. Collateral value is crucial in determining the loanable amount. 
  • Collateral: Collateral determines the loan amount. Missed payments can lead to collateral seizure. Credit history may also be considered.

Maximizing Your Personal Assets

Accessing your personal finances or assets can provide additional funds to meet your short-term requirements. In addition to using their own resources, many business proprietors rely on loans from friends and family. This approach may offer more flexibility in terms of repayment schedules and interest rates compared to other alternatives.

Investing to Equity

When seeking funding, some business owners may consider equity financing, which involves receiving funding from venture capitalists in exchange for partial ownership of the business. However, this type of financing can be difficult to obtain and may require relinquishing some control over important decisions. 

It’s crucial to remember that equity financing often entails a lengthy commitment, with venture capitalists frequently staying on board for several years before walking away. Finally, before making a choice, business owners should carefully consider the advantages and disadvantages of equity financing.

Peer-to-Peer Lending

Utilizing peer-to-peer (P2P) lending is a potential avenue to consider when seeking capital for your business. P2P lending is a rising trend and a feasible option for raising funds. These platforms enable borrowers, particularly small and medium-sized enterprises (SMEs), to connect with individual investors or lenders interested in providing financial support.

Getting Microloans

For those who own a business but possess minimal collateral, microloans may be a viable option for financing their endeavors. These loans can be used to pay for ongoing costs as well as the capital required for supplies, furnishings, and equipment.

Applying for Small Business Loans

Entrepreneurs and small business owners who want to secure financing for their ventures must take the critical step of applying for small business loans. The loan application process can be an important turning point in your business journey, whether you’re beginning a new venture, growing an existing one, or taking care of cash flow concerns. Therefore, while applying for small company loans, meticulous planning, documentation, and diligence are required.

Vidalia Lending Corp. Small Business Loans

Vidalia Lending Corp. is an institution that offers non-bank financing to entrepreneurs and business owners across the country, with a focus on providing business loans. Over the years, Vidalia Lending Corp. has successfully helped SMEs from various sectors. 

We offer a simple application process, minimal documentation requirements, and collateral-free lending making us an excellent partner for businesses seeking capital to expand and grow. Contact us today