Small Business Loan Product Features Term Loan BCL Purpose For fixed asset acquisition, business expansion and additional working capital For working capital and other day to day expenditures of the business. Borrowers will be issued a BCL checkbook, the checks of which can be issued against borrower’s approved line. Loan Amount PHP 1.0 MM to PHP 15 MM Pricing At prevailing lending rate Collateral Any prime residential / commercial / industrial property with or without improvements and/or Cash Deposits under the name of the applicant Insurance A fire insurance coverage at 100% of appraised value of the insurable real estate collateral and must be endorsed in favor of the bank Term of the Loan Minimum: One (1) year Maximum: Five (5) years Up to Line expiry (Credit Line is valid for one (1) year subject to annual review) Manner of Availment Via Promissory Note; proceeds to be credited to borrower’s deposit account with the bank. Via Check issuance Repayment Via Post Dated Checks (PDCs) Monthly amortization of Principal + interest Via Automatic Debit from BOC Account Interest + 5% of Outstanding Principal payable monthly Penalty for Late Payment 18% penalty fee per annum Prepayment Penalty None Application Documentary Requirements SBL Application Form Photocopy of any 2 valid IDs with photo and signature Copy of ITR & AFS of the business for the last three (3) consecutive years DTI Certificate of Business Name Registration for sole proprietorship / SEC Papers for partnership and corporation Business/ Mayor’s Permit Bank Statements for the last 6 consecutive months Signed Authority to Bank Check Collateral Documents Copy of TCT/CCT, updated Tax Dec & RETRs Vicinity Map/location plan/lot plan/building plan Master Deed of Restriction (for condos) Copy of Deposit Instrument (if secured by deposit) FAQs Which Small Business Loan (SBL) is right for me, Term Loan or Business Credit Line (BCL)? The SBL that is right for you will depend on the business requirement you need to address. If your business need is: Go for Term Loan Go for Business Credit Line Fixed asset acquisition ✓ Business expansion ✓ Additional working capital (non-recurring) ✓ Investment in spot business opportunity ✓ Other major single purchase transaction ✓ Financing for inventory ✓ Financing of receivables ✓ Other working capital requirement based on business cycle ✓ Moreover, benefits are: Term Loan Guaranteed interest rate protection: not subject to uncertainties and fluctuations on interest rates. Manageable monthly payment: Payment will be the same every month hence budgeting is straightforward. Business Credit Line Convenience: Available when you need it. There is no need to go to the bank to sign a Promissory Note whenever funds are needed. BCL gives you an instant access to funds by simply issuing a check. This check can be issued anytime even weekends or holidays. Flexibility: schedule your repayment for funds actually used and regain the use of your BCL as you pay down the principal Who may apply? Sole Proprietorships who are Filipino citizens; Corporations and Partnerships (at least 60% Filipino-owned) Depositor of Bank of Commerce or other bank/s for at least one (1) year and who maintains an ADB of at least P200,000 Must have at least 3 years of profitable operations Owner is not more than 65 years old upon maturity of the loan No derogatory record related to credit and/or deposit Business must be registered with DTI or SEC Must offer acceptable real estate collateral and/or peso or foreign time deposit with any Bank of Commerce branch Once approved, depositor of other bank will be required to open a deposit account with the Bank. How much can I apply for? The minimum loan amount for both Term Loan and BCL is P1.0 Million. However, you can borrow up to P15.0 Million, depending on your need and the appraised value of your collateral. What is the acceptable Collateral? Any prime residential, commercial or industrial property, with or without improvements, and/or Cash Deposits under the name of the loan applicant. How long is the payment period? For Term Loan, one (1) year to five (5) years, meanwhile BCL is payable in one (1) year, subject to renewal How do I pay for my monthly due? Conveniently pay your monthly due through: Term Loan Post Dated Checks (PDCs) Business Credit Line Automatic Debit from your Bank of Commerce Account What is the basis of the Interest Rate? At prevailing bank lending rate What and how much are the bank charges? The following charges apply and these are to be paid by clients in stages as the loan processing progresses: Amount When to Pay Appraisal Fee P 3,500.00 per Location (if within Metro Manila) P 4,000.00 per Location (If outside Metro Manila) Upon loan application (non-refundable) Processing Fee P 5,000.00 Upon approval of the loan Other standard charges (such as but not limited to Registration of REM, Notarial, Insurance, etc. Upon loan approval Documentary Stamps P 1.50 for every P 200.00 loan amount Upon loan approval, prior to release of loan How do I apply for SBL? Borrower must fill-out application form Borrower shall submit the following documentary requirements for evaluation to any branch of Bank of Commerce Copy of Audited Financial Statements and ITR for the past 3 years Copy of DTI Certificate of Business Name Registration for Sole Proprietorship / SEC Papers for Partnership and Corporation Business / Mayor’s Permit Bank Statements for the last six (6) months Bank Certificate with tenure of deposit and 6 months ADB (if other bank depositor) Photocopy of any two (2) valid IDs with photo and signature Copy of TCT / CCT Updated Tax Declaration Real Estate Tax Receipts (RETRs) Vicinity Map / Location Plan / Lot Plan Master Deed of Restriction (for condominiums) Building Plan (if with building) Copy of Deposit Instrument (if secured by deposit) Sample Amortization Schedule for Term Loan Sample Amortization Schedule for Term Loan Loan Amount Term 1 year 2 years 3 years 4 years 5 years 1,000,000 86,296.42 44,999.59 31,106.22 24,412.92 20,276.39 2,000,000 172,592.83 89,999.19 62,212.44 48,825.84 40,552.79 3,000,000 258,889.25 134,998.78 93,318.65 73,238.77 60,829.18 4,000,000 345,185.67 179,998.37 124,424.87 97,651.69 81,105.58 5,000,000 431,482.08 224,997.96 155,531.09 122,064.61 101,381.97 6,000,000 517,778.50 269,997.56 186,637.31 146,477.53 121,658.37 7,000,000 604,074.92 314,997.15 217,743.53 170,890.46 141,934.76 8,000,000 690,371.34 359,996.74 248,849.75 195,303.38 162,211.15 9,000,000 776,667.75 404,996.33 279,955.96 219,716.30 182,487.55 10,000,000 862,964.17 449,995.93 311,062.18 244,129.22 202,763.94 11,000,000 949,260.59 494,995.52 342,168.40 268,542.15 223,040.34 12,000,000 1,035,557.00 539,995.11 373,274.62 292,955.07 243,316.73 13,000,000 1,121,853.42 584,994.70 404,380.84 317,367.99 263,593.13 14,000,000 1,208,149.84 629,994.30 435,487.05 341,780.91 283,869.52 15,000,000 1,294,446.25 674,993.89 466,593.27 366,193.84 304,145.91 Note: Monthly amortizations above are based on prevailing lending rate at the time of computation. Actual figures may vary and are subject to change without prior notice. Additional FAQs If I avail BCL but have not drawn any checks yet, will I be charged interest? No. You only pay interest for the availed portion or drawn checks. If I apply for BCL, when do I need to pay the loan? You will receive your Statement of Account (SOA) via email every 5th of the month and payment due date is every 20th of the month. If due date falls on Saturday, Sunday or Holiday, when am I going to pay? If your payment due date falls on a Saturday, Sunday or a non-working Holiday, you must settle payments on the banking day immediately preceding such due date to avoid penalty charges. What happens if I fail to pay on due date? Failure to pay the Minimum Amount Due on Payment Due Date shall result to the immediate suspension of your BCL and you shall no longer be allowed to make any availment after the due date. Further, you will incur a late penalty charge of 1.5% per month of the minimum amount due. Can I pay my loan in advance? You may repay your loan anytime without any pre-payment penalty and the payment on principal will become part of the available BCL. How much will be my monthly due? Your minimum monthly due is 5% of your outstanding Principal + Interest + other Charges (if there’s any). You must pay at least the minimum amount due indicated in your monthly SOA. Any payment made that is lower than the Minimum Amount Due shall be deemed as non-payment and shall be subject to the applicable penalty charges. Small Business Loan: Self-assessment Questionnaire to check your eligibility YES NO My age is between 21 to 65 years old ☐ ☐ I am a bank depositor for more than a year with ADB of at least PhP 200,000.00 ☐ ☐ I do not have a history of mishandled accounts, delinquent credit cards or past due loans ☐ ☐ Never had a case filed against me, my partners or my business ☐ ☐ My business requires additional working capital ☐ ☐ My business is operating and profitable for the past three (3) consecutive years ☐ ☐ My business is 100% Filipino owned ☐ ☐ The nature of my business is not into extractive activities or vice generating operations ☐ ☐ I am willing to offer a collateral to secure my loan ☐ ☐ RESULTS: ü All YES Congratulations! You are eligible to apply for a Small Business Loan. Please visit your nearest Bank of Commerce branch to further discuss your business loan requirements and application. ü With one or more NO We wish to encourage you to go through this exercise again after six (6) months or more, at which time, new development would allow us to better assist you in your loan requirements. Tips on How to Maintain Good Credit Below are some helpful tips which you can adopt when building a strong credit background: Stick to your ”knitting”. Your core business is what you do best for your customers and “sticking to your knitting” means emphasizing your core business to your market and working in the area of the business that you know best. Business ventures fail utterly when owners decide to diversify away from their area of expertise. Expanding into other product lines or services takes a large amount of time, effort and resources, and should be carefully planned out. Manage your “cash drivers”. Pay attention to your cash drivers – gross profit, account receivables, inventory and account payables since these directly affect your business day-to-day cash operations. Build and maintain solid margins, stay solvent by striving for a faster collection, hold appropriate inventory to cover the demands of your business and make sure bills are paid when they are due. Manage Cash Flow. Track your cash flow results every month to determine if your management is creating the type of cash flow your business needs. Prepare a cash flow statement as this helps you get better at creating cash flow projections you can rely on as you expand your business and take care of your bills. Likewise, review and reconcile your bank statements monthly. This helps you analyze if you need to speed up receipt and processing of receivables, lower the inventory level or negotiate for a longer payment term from your suppliers or at most, plan short term borrowings well in advance, in case of a cash shortage. Keep your business and personal finances separate. As a business owner, it’s tempting to blur the lines between personal and business expenses; however, maintaining a distinct separation is one way of ensuring long term success and financial growth. Apply proper accounting and bookkeeping practices so that financials are treated separately. Build a good relationship with your bank. As with any relationship, building on a strong foundation will lead to long-term success. Physically visit your bank and establish relationships with the bank manager and staff. Make sure your bank understands your business plan as well as concerns or requirements of your business. Your bank can be your great ally in tapping opportunities for your business. Your relationship is a two-way street. Demonstrate financial fitness over time by maintaining the required minimum balance/amount of your deposit accounts, avoiding issuance of checks that are unfunded and paying your amortization due on time. Understand and fulfill your obligations as a borrower. When you agree to borrow money from a financial institution, you enter into a legal contract. It is your responsibility to ensure that you meet your obligations as a borrower: Read and understand all documents before signing them. A loan is a legal obligation. Make it your goal to adhere to the terms and conditions of the loan, particularly paying your bills on time. Inform your creditor of any material changes in your business such as, but not limited to, change in ownership structure, securing additional loan from other financial institutions, etc. Consult professionals. Seek advice from experienced professionals or experts for counsel on various areas of your business such as legal advice, tax settlement, accounting and bookkeeping, HR matters, advertising and marketing strategies. Draw up a budget and stick to it. A budget enables you to sort out money priorities and find the right balance between spending and saving. Try not to spend your income on extremely extravagant things such as purchasing non-essential items for your business, speculating on land values or spending beyond your means. These can have disastrous effects on your cash flow. Plan ahead. Be forward looking. Anticipate macroeconomic developments while accommodating significant economic changes and minimizing adverse effects on your cash flow. Have a contingency plan for emergency situations that may come your way.