Your bank won't extend enough working capital: what are the alternatives for Philippine companies?

Short answer: A Philippine company should not replace one undersized bank line with the first expensive loan available. First identify whether the gap is seasonal, tied to receivables, inventory, a purchase order or permanent growth capital. Then match that need to receivables, trade, asset-backed, non-bank, government-supported or equity funding.

You may have a profitable business, a long banking relationship and a credible growth plan, yet the approved working-capital limit still falls short of the cash the company needs. That does not automatically mean the bank is wrong or that another lender will fund the difference on better terms. It means the company has to separate the operating need from the current bank product and understand what another capital provider can actually underwrite.

This guide is for established Philippine companies facing that decision. It focuses on business working capital, and it assumes management wants enough liquidity to operate through a downside case rather than merely close the fastest available loan.

The bank's limit is a diagnosis, not a funding plan

Start by asking the bank for a clear explanation of the approved amount and the constraint behind it. A smaller limit can reflect cash-flow capacity, collateral value, customer concentration, industry exposure, weak reporting, an existing covenant, the bank's total exposure to the group or its appetite for that type of credit. Those causes lead to different alternatives.

The Philippine banking system is not closed to smaller companies. The Bangko Sentral ng Pilipinas reported that loans to micro, small and medium enterprises grew 11.2% to PHP 544.8 billion as of June 2025. The useful conclusion is not that another lender will say yes. It is that the market contains credit, while each lender still applies its own risk limits and underwriting standards.

Size the working-capital gap before choosing a product

Use a 13-week cash forecast for the immediate trough and a monthly model for the following 12 to 18 months. The required facility is not average receivables or one month's expenses. It is the peak cumulative cash deficit in the base and downside cases, plus a deliberate liquidity buffer, less cash on hand and committed undrawn facilities.

Reconcile the forecast to actual bank movements and the balance sheet. Show when receivables convert, when inventory is purchased and sold, when suppliers are paid, and when taxes, payroll, debt service and capital expenditure leave the account. If the need never falls back after the operating cycle completes, part of the gap is permanent capital rather than working capital.

• Seasonal gap: cash returns after a predictable peak. A revolver or seasonal line may fit.
• Receivables gap: the company has completed the sale but waits for creditworthy customers to pay. Invoice or receivables finance may fit.
• Purchase-order gap: the company has a firm order but must buy inputs or fund delivery before invoicing. PO or trade finance may fit.
• Inventory gap: cash is tied up in stock with a reliable resale path. An inventory-backed or borrowing-base facility may fit, subject to eligibility and controls.
• Capex mismatch: equipment or vehicles are consuming a short-term line. Leasing or term debt can restore working-capital availability.
• Permanent gap: the business remains short even after normal collections and supplier payments. Equity, shareholder funding or subordinated capital may be safer than short-term debt.

Free the existing line from long-lived uses first

A company can appear to need a larger working-capital line when the real problem is that the line financed machinery, vehicles, store fit-out, software implementation or another multi-year asset. Refinance those uses over their economic life where possible. The same principle applies to import letters of credit, guarantees and other contingent facilities that may consume the same bank limit even before cash is drawn.

This restructuring does not create free money. It gives each obligation a repayment profile closer to the asset or transaction that produces the cash. It can also reduce renewal risk, because the company is no longer depending on a short-dated facility to fund a long-lived asset.

Working-capital alternatives in the Philippines

1. Add a second bank or a shared facility

A second bank can add capacity when the first bank's limit reflects relationship size, sector concentration or a narrow collateral policy rather than weak company economics. This route usually preserves bank-level pricing, but it requires clean coordination.

Review the existing loan and security documents before making promises to another lender. A negative pledge, all-assets security, assignment of receivables, cross-default, account-control arrangement or lender consent requirement can block what looks like unencumbered capacity. Decide whether the banks will share security, take separate asset pools or provide different products. Do not discover that conflict after both have issued conditional offers.

2. Finance eligible receivables

Receivables finance can grow with sales because availability is tied to eligible invoices rather than a fixed property value. It can work well for completed B2B sales to creditworthy customers with clear acceptance and predictable payment behavior.

The headline advance rate is not the same as usable cash. Lenders may exclude overdue invoices, related-party balances, disputed invoices, foreign receivables, concentrated customers or invoices that cannot be assigned. They may also deduct reserves for credit notes, returns and dilution. Compare recourse, customer notice, collection control, concentration limits and how quickly availability is recalculated.

Philippine law provides a framework for security interests in personal property. The Personal Property Security Act expressly addresses security interests and buyers of accounts receivable. That legal framework does not make every invoice financeable. The contract, debtor quality, existing security and lender policy still control the commercial outcome.

3. Use purchase-order, trade or supply-chain finance

When the cash need starts before invoicing, receivables finance arrives too late. Purchase-order finance may fund inputs against a firm order. Import or trade facilities can support inventory purchases and documentary requirements. Buyer-led supply-chain finance can allow a supplier to receive cash earlier based partly on the buyer's credit, while supplier terms or customer deposits can reduce the amount that needs external funding.

These structures depend on transaction evidence. A lender will examine the buyer, order terms, gross margin, supplier, delivery risk, cancellation rights and the route by which sale proceeds repay the facility. A purchase order with a low margin, weak buyer, unresolved conditions or uncertain delivery is not equivalent to cash.

For eligible MSMEs, the current SBCorp Citizen's Charter includes RISE UP multi-purpose facilities and a purchase-order financing program. Eligibility, transaction history, amount, tenor, fees, security and approval rules apply. Treat these as specific programs to test, not as automatic approval or a complete funding plan.

4. Finance inventory and equipment separately

Inventory-backed finance can help distributors, retailers and manufacturers when stock has transparent value, reliable turnover and strong controls. Availability may be reduced for obsolete, slow-moving, highly customized, perishable or difficult-to-verify inventory. Expect reporting, inspections and reserves.

Equipment loans, finance leases and sale-and-leaseback structures can release a working-capital line that is funding productive fixed assets. Compare the asset value, deposit, residual or balloon, maintenance obligations, insurance, security and total cash cost. Also confirm the accounting and tax treatment with the company's advisers.

The BSP's National Strategy for Financial Inclusion annual report identifies movable-asset finance, including machinery, accounts receivable, inventory, warehouse receipts and supply-chain finance, as an important route for MSME access to credit. Availability still varies by lender and asset.

5. Consider non-bank cash-flow lending or private credit

A financing company or private credit provider may move faster, accept a different collateral package or structure around cash flow that a bank will not recognize. The trade-off is usually a higher all-in cost, tighter reporting, stronger control rights or a shorter path to enforcement if performance deteriorates.

Do not compare a monthly rate with an annual bank rate. Convert every offer into total peso cash received and total peso cash paid under the same draw date, repayment schedule and downside case. Include origination and monitoring fees, taxes, legal and registration costs, unused-line fees, mandatory deposits, prepayment charges and default pricing.

Verify the exact counterparty. The Philippine Securities and Exchange Commission states that a lending company may not operate without SEC authority, and it describes factoring, receivables discounting and financial leasing as financing-company activities. Check the legal entity, certificate of authority, current status and the SEC's advisories and notices before signing or paying a fee.

6. Ask whether a government guarantee channel applies

A credit guarantee can make a qualifying exposure more acceptable to a participating lender. It is not cash paid directly to the company and it does not remove the lender's credit decision, documentation or security requirements.

PHILGUARANTEE reported that it worked with 202 active partner lending institutions during 2025. Those partners included banks and other financial institutions. Its current guidance directs prospective borrowers to partner financial institutions. Ask a prospective lender whether a relevant program applies to the proposed facility. Do not assume that a guarantee will fill the entire gap.

7. Use equity or subordinated capital for a permanent gap

Debt is a poor fit when the company will not generate enough cash to repay it under a credible downside case. Shareholder funding, preferred equity, a strategic investor, growth equity or subordinated capital may provide a longer runway. These options can dilute ownership, add consent rights or demand a higher economic return, but they do not force a self-liquidating working-capital cycle into a short repayment schedule.

Be honest about what the capital is funding. If it covers recurring operating losses, a new market with uncertain payback or a major step-up in fixed costs, describe it as growth or turnaround capital. Calling it working capital does not create a repayment source.

Match the structure to the cash event

Compare offers on availability, total cost and control

Put every lender into the same term-sheet grid. A facility with a large headline limit may provide less usable cash after reserves, exclusions, upfront fees and mandatory deposits. A cheaper line may be unavailable exactly when customer concentration or inventory aging worsens.

• Availability: committed amount, draw conditions, borrowing-base rules, advance rates, concentration limits and reserves.
• Cash cost: interest method, fees, taxes, legal and registration costs, monitoring charges, unused-line fees and prepayment charges.
• Repayment: amortization, maturity, clean-down requirement, balloon and cash-sweep provisions.
• Security: assets charged, personal or corporate guarantees, account control, receivables assignment and priority against existing lenders.
• Control: financial covenants, reporting frequency, consent rights, restrictions on dividends, acquisitions, new debt and related-party payments.
• Failure case: default triggers, cure periods, default pricing, collection control and enforcement rights.
• Execution: credit-committee conditions, diligence still outstanding, documentation time and certainty that funding will be available by the required date.

Build one lender-ready working-capital pack

The BSP's Standard Business Loan Application Form has streamlined part of the MSME application process for covered institutions, but BSP guidance also makes clear that lenders still need additional KYC information, including beneficial-owner verification. Prepare one reconciled pack that can support several lender processes without assuming every lender asks the same questions.

• the exact amount, use, draw date, duration and repayment source;
• audited financial statements, current-year monthly management accounts and applicable tax filings;
• a 13-week cash forecast and 12-to-18-month base and downside model;
• accounts-receivable aging, customer concentration, credit notes, disputes and collection history;
• inventory aging, turnover, location, ownership, valuation method and obsolescence policy;
• accounts-payable aging, supplier terms and any overdue or disputed balances;
• bank statements, existing debt schedule, facility letters, security, guarantees, covenants and current headroom;
• major customer contracts, accepted invoices, purchase orders and supplier quotations relevant to the request;
• SEC or DTI registration, permits, ownership, beneficial owners and authorized signatories; and
• a short explanation of recent variances, one-off items and the management actions in the downside case.

Run a controlled lender process

Approach lenders with the same base information and a precise request. Keep a log of questions, data shared, conditions, expected credit dates and decision makers. Give management a single comparison date so one lender is not quoting against a newer forecast than another.

Do not create a false auction or hide an existing lender's rights. Explain the intended capital structure and obtain required consents. The objective is a financeable structure that can close and operate, not the largest collection of non-binding term sheets.

A practical 10-business-day plan

1. Days 1 and 2: obtain the current bank's reasons, confirm existing facility terms and identify every security and consent constraint.
2. Days 2 to 4: rebuild the 13-week cash forecast, quantify the base and downside trough, and separate seasonal, transaction-linked, capex and permanent needs.
3. Days 3 to 5: prepare receivables, inventory, purchase-order, debt and corporate-document schedules. Reconcile them to the accounts.
4. Days 5 and 6: decide which two or three structures genuinely match the cash event. Do not send every lender the same generic loan request.
5. Days 6 to 8: create a lender shortlist and issue the same concise information pack and timetable.
6. Days 8 to 10: compare availability, total peso cost, security, controls and execution conditions. Escalate any legal, tax or accounting questions to the appropriate advisers before signing.

Find the right Philippine lenders for the structure

Once the need and structure are clear, use Alehar's Philippines Business Lenders Directory to compare banks and non-bank providers that may fit the company, facility type and amount. Verify each provider and request against current lender criteria.

If you do not yet know how much debt the business can support, start with the Philippines Debt Capacity Calculator. If the bank's ceiling is the real constraint, the next step is a structured raise: our Raising Equity or Debt service works out whether debt, equity or a mix is the right answer for what you're funding, then runs the raise.