No business will be built up without any capital to start with, and if it manages to thrive and gain loyal clients, then it will need a financial boost to expand the enterprise. Simply put, if you are determined to set your business idea in motion, either you have to use your savings or get a loan which you can use as a stepping stone. Let us not be hypocrites, without cash no business will become a reality.
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BDO Business Loans
BDO offers an SME Loan to entrepreneurs who want to expend their business to go beyond their current boundaries. With the use of your estate, getting an SME loan has been made easier to Filipinos and Permanent Residents aged 21 to 65. Aside from an estate property, you also have to prove that your business has been profitable for at least two consecutive years with at least an annual gross of Php 1million. With this gross income in year, we clearly have an idea that we are not talking about a sari-sari here.
Getting an SME Loan is not an easy task if you are getting it from a reputable bank such as BDO. Expect a long list of requirements and dedicate a lot of time completing the needed documents. Since this loan is a secured loan, you must know that you have to purchase insurance aside from paying the loan with the interest rate. Prepare your title, tax declaration, appraisal fee, among your other personal paperwork.
The BDO SME Loan interest rate is not fixed as you are using an asset as your collateral. The interest rate is subject to change each year based on the appraised value of your property. This is a disadvantage on your part since you might have no idea on how much you have to repay on the following year. Also, your loan is highly limited depending on the asset you used as your collateral. To get a minimum loan of P1, 000,000, you must be earning at least P55, 000 and your asset must worth higher than your loan.
Which SME Loan should you get?
BDO is offering two SME loans: SME Ready Check and Term Loan
If you are applying for a loan to add on your working capital, then you need the SME Ready Check. You can use the cash for acquiring new stocks for your inventory. This is particularly useful if you are doing more production during holidays. The credit line is valid for a year, and also renewable. If you are going to use it for multiple purchases spread for a year, you can easily assess the credit line with checks.
Since you are not sure about your business cash flow, there might be a time when you might fail to pay your full repayment of the due date. To avoid incurring a late payment fee, you can just pay the minimum amount due which is the documentary stamp tax and the loan interest. You can pay the principal loan based on your business cash flow. In case you need to stretch your loan term, you can request for it through online.
On the other hand, if you want to use the loan to purchase a new property for expansion or buy new needed equipment in just one payment, then you must get the Term Loan. Unlike the SME Ready Check, the loan will be provided in a lump sum which you have to repay up to 10 years. Pay on the agreed repayment scheme of else you will incur a late repayment fee.
Aside from the interest fee, you must remember that there are also other expenses that you have to take care of. This does not include the fees you have to pay to get your required documents from the respective government and private institutions.
When you apply for a SME loan, you have to use an estate as your collateral. You need to pay an appraisal fee, per title (if you have multiple assets) before your loan get processed. If your property is located in Manila, you need to pay P3, 500, if it is located outside, then you need to add P1, 000. Your loan process will take 10 to 15 working days.
Once approved, you will have to settle the handling fee, notarization fee, collateral registration fee, documentary metered stamp, Commitment fee, the Mortgage Redemption Insurance (MRI) and the Fire Insurance Premium. It is important to get the mentioned insurance for your protection. The payment amount of the insurance will greatly depend on the appraised value of your property.
Once approved, you can receive your disbursed cash in your bank account. If you want to monitor your loan repayments and the remaining balance, you ca fill out an online customer request form. Repay your balance through Automatic Debit Arrangement (ADA)
How to Compute the Minimum Amount Due for SME Ready Check
In case you run short of cash to pay the required repayment amount, you can opt to settle the Minimum Amount Due to prevent incurring late repayment charges. To find out your minimum amount due, you need to know the number of days from the time you availed the loan up to the payment due date. The payment due date is usually the 25th of every month. As long as you hadn’t settled your balance, you will continuously be charged with the interest cost and the DST.
- Interest Cost = (Interest Rate x Loan Amount Availed x Number of Days to Payment Due Date) ÷ 360 days
- DST = (Loan Amount Availed ÷ 200 x Number of Days to Payment Due Date) ÷ 365 days
- Minimum Amount Due = Interest Cost + Documentary Stamp Tax (or DST)
- Has SME Ready Check and Term Loan
There are two options depending on your business need. The term loan is for onetime payment to purchase a property or equipment while the SME Ready Check is mainly used as a working capital to keep up or increase the production.
- Flexible payment
If you have no enough cash to pay the due repayment amount, then you can choose to pay the minimum account due.
- Very high minimum loan amount
As said earlier, the minimum loan repayment is quite high for though who only want loans for small businesses such as a sari-sari store or a franchise stall. If you are planning to get a loan for a micro business, this is not for you.
- Long process
If you are looking forward to use a loan for a needed immediate purchase, then you should know that the process takes at least a week or two. By the time you got your loan, the opportunity would have already been passed up.
- Needs properties as collateral
This loan is only for those who have a property to be used as collateral. If you do not have an estate, then your loan will not be approved since the BDO SME Loans are secured loans.
Let’s say you have come across a business opportunity, yet you don’t need a loan as high as P1million pesos. BDO SME Loan is not fit for you. Take another option and get a fast cash loan from Cash Mart. Receive your cash in just a day, because Cash Mart knows your time is valuable and time means money.