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How to Apply for a Loan for Your Franchise Business

bank-loanNot everyone has the resources nor the aptitude to start and run a business. Franchising on an existing business is actually one of the easiest ways to being a business owner. If you can’t be bothered with having to apply for business permits and other legalities involved in registering and opening a business, buy a franchise instead.

Franchising can earn you profit much sooner compared to starting a business from scratch. Businesses that offer franchises are usually already established with aggressive plans for expansion, which means that you can be sure to profit from this type of investment.

Getting a franchise, though more affordable, still requires a substantial amount of money. If your savings aren’t enough, you may have to look for an additional source of funding. One option is to go to your bank to ask for a business loan. A personal loan may also be a suitable option if the franchise you are eyeing is not too expensive.

Why Loan is Needed for Business

Lending companies, banks, cooperatives, and the government are often willing to  provide capital to aspiring entrepreneurs. The availability of affordable financing for individuals who want to acquire a franchise in the Philippines has driven a growth in the industry in recent years. More and more small, but high-potential local businesses are also catching the attention of small investors.

Compared to other types of businesses, franchising doesn’t require a lot of planning. It is a good investment option if you are interested in running a business that you can’t run on a full-time basis. Many successful brands available for franchising offer training and support, as well as professional advice, to make it as easy as possible for franchisees to market their goods in another locality.

Where and How to Apply for a Loan

There are different banks that offer business and personal loans to individuals who are interested in franchising:

BPI Family Savings Bank

It is easy to avail loans from the BPI Family Savings. For short-term, long-term, or even franchising loans, BPI Family’s Ka-Negosyo Loans can get you a franchising loan with a minimum term of two years, at a base amount of PHP 500,000. As for payment terms, BPI Family would usually require you to only pay for interest in the first six months. Principal payments will start on the 7th month. For queries, just head onto any of their 831 branches all over the Philippines.

Banco de Oro (BDO)

BDO offers Small Business Loans for entrepreneurs. For a minimum term of one year, individuals can borrow at least PHP 500,000 or a maximum of PHP 20 million, which will depend on the appraised value of your collateral. Loan payments can be made through an Auto Debit Arrangement using your BDO Current or Savings Account. To know more details about this loan, visit any of the bank’s 740 branches (some are located in most SM malls) across the country.

Land Bank

In cooperation with the Overseas Workers Welfare Administration, Land Bank offers loans catered specifically for Overseas Filipino Workers who want to get franchise.  You can borrow from a minimum of PHP 300,000 up to a maximum of P2 million.

Philippine National Bank (PNB)

For startup or existing businesses, you can avail PNB’s Kabuhayan SME Loans. This type of loan provides short-term funding for small businesses. You can borrow a minimum of PHP 500,000, with a maximum loan term of five years.

Philippine Savings Bank (PSBank)

PSBank’s SME Business Credit Line is available for those looking to fund small to medium-sized businesses. The program comes with a one-year credit line that can be accessed via check-writing.The SME term loan comes with a prime rebate that allows up to a seven-year loan term. You can earn rebates or savings by paying advance or excess payments onthe loan’s monthly dues. There are 200 branches of PSBank.

There are many franchise loans available that will suit your needs. Make sure to look for a loan that matches your income and be realistic about your profit growth projection. As a rule of thumb, monthly payments on your loan should make up less than 40% of your net income or estimated revenues. To avoid getting into too much debt, you might want to try getting a personal loan first.

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This contribution is exclusively written for FranchiseManila.com by MoneyMax.ph, the Philippines’ leading financial comparison website for credit cards, broadband plan, home loan and more—fast comprehensive, and free. Please do check our website to learn more.

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