The LANDBANK Franchising Lending Program is a specialized loan offering by LANDBANK of the Philippines, designed to assist Filipinos planning to establish a franchise business. Eligible applicants can receive up to 80% of their project cost, with a minimum loanable amount of ₱100,000, to cover various expenses associated with setting up the franchise.
Applicants must provide essential documents, such as a valid Franchise Agreement, registration certificates, and financial statements, to prove their business intentions and eligibility. There is no specific deadline to apply, making it accessible to qualified franchisees and franchisors year-round.
This program aims to support the growth and sustainability of franchise businesses, promoting inclusive economic development in the Philippines.
Overview
The LANDBANK Franchising Lending Program is designed to provide credit assistance to both new and existing players in the franchising industry.
This aims to support the growth and sustainability of the franchising sector, promoting inclusive economic development in the Philippines.
Significance of the Program
The LANDBANK Franchising Lending Program holds immense significance for the franchising sector and the broader economy of the Philippines.
Here’s why this program is important for potential investors:
Promotes Economic Growth
Franchising is a proven business model that drives economic activity.
By providing financial support to franchisees and franchisors, the program stimulates business expansion, job creation, and overall economic growth.
The program’s emphasis on inclusive growth makes sure that benefits reach a wider segment of the population, contributing to national development.
Supports Entrepreneurs
The program empowers Filipino entrepreneurs by offering them the financial resources they need to start or expand their franchising ventures.
This support is important for small and medium enterprises (SMEs) that might otherwise struggle to secure funding.
By fostering entrepreneurship, the program helps cultivate a dynamic and resilient business environment.
Enhances Business Sustainability
Access to funding for fixed asset acquisition, capital expenditure, and working capital ascertains that businesses can maintain and improve their operations.
This financial backing helps franchisees and franchisors withstand economic fluctuations and competitive pressures, enhancing their long-term sustainability.
By supporting infrastructure development and technological upgrades, the program helps businesses stay competitive and efficient.
Facilitates Inclusive Development
The program’s eligibility criteria and loan terms are designed to be accessible to a wide range of businesses, including those owned and operated by Filipinos.
This inclusivity guarantees that even small-scale entrepreneurs have the opportunity to benefit from the program.
By promoting inclusive development, LANDBANK helps reduce economic disparities and foster a more equitable business landscape.
Strengthens the Franchising Sector
The program supports both new and existing franchisees and franchisors, bolstering the entire franchising ecosystem.
By facilitating the entry of new players and the growth of existing ones, the program enhances the vibrancy and diversity of the franchising sector.
This, in turn, attracts more investment and innovation, further strengthening the industry.
The LANDBANK Franchising Lending Program is more than just a financial product; it is a strategic move aimed at fostering sustainable economic development through the promotion and support of the franchising sector.
By empowering entrepreneurs, enhancing business sustainability, and promoting inclusive growth, the program plays a vital role in the economic advancement of the Philippines.
Eligible Borrowers
- Franchisees
- New and existing franchisees with a valid contract or franchise agreement with a franchisor.
- Franchisees can be unit franchisees, area franchisees, area developers, or master franchisees.
- The franchisor-partner must be registered and a member in good standing with a recognized franchisor/franchise association.
- Franchisors
- New and existing franchisors who are registered and in good standing with a recognized franchisor/franchise association.
Eligibility Requirements
Borrowers must be legally registered with appropriate agencies and fall under one of the following categories:
- Single Proprietorship (Filipino citizen)
- Partnership (100% Filipino-owned)
- Corporation (at least 60% Filipino-owned)
Loan Purposes
Loans from the LANDBANK Franchising Lending Program can be utilized for a variety of purposes, including but not limited to:
1. Fixed Asset Acquisition/Capital Expenditure
- Construction, expansion, renovation, repair, or upgrading of structures and facilities, including offices, commissaries, warehouses, and transport facilities.
- Acquisition of systems, equipment, utensils, instruments, and logistics support.
- Payment for franchise investment packages and pre-operating overhead costs or initial investments, including site development.
- Payment for franchise renewal fees and long-term leases of sites/facilities.
2. Working Capital
Loanable Amount
- Borrowers can avail loans up to 80% of the project cost or their repayment capacity, whichever is lower.
- The minimum loanable amount is ₱100,000.
Loan Tenor
Short Term Loan/Line
- Loans can be structured for up to 360 days, depending on the borrower’s or project’s cash flow, as assessed by the Lending Unit.
Term Loan
- For fixed asset acquisition, capital expenditure, or payment of franchise investment packages and pre-operating overhead costs: Maximum of 10 years, including a grace period of up to three years on principal repayment.
- For permanent working capital: Maximum of three years without a grace period on principal repayment.
- For franchisees, the loan tenor should not exceed the term or remaining term of the Franchise Agreement or Contract.
Manner of Release
For Unit Franchise
- The loan amount will be credited to the borrower’s account in one lump sum.
For Area Franchisee/Developer, Master Franchisee, and Franchisor
- Loans can be credited to the borrower’s account either in one lump sum or on a staggered basis, depending on the loan purpose and business needs.
- For construction or infrastructure purposes and other capital expenditures related to the franchise business, the release mode will follow progress billing as per existing LANDBANK policies and the Franchise Agreement provisions.
Repayment Terms
Short Term Loan/Line
- Monthly interest payments collected in arrears. The principal amount is payable on the maturity date of the Promissory Note (PN).
Term Loan
- Interest and principal payments can be made monthly or quarterly, depending on the borrower’s cash flow.
Fees and Charges
- Standard fees and charges required by LANDBANK apply for loans funded by internal funds.
- Applicable fees and charges will be imposed for loans funded by special funds.
Collateral/Security
Acceptable forms of collateral/security include:
- Real Estate Mortgage
- Chattel Mortgage
- Deed of Assignment of Hold-out on Deposits, Government Securities, Government-issued Bonds
- Deed of Assignment of Inventories, Letters of Credit, Receivables, Validated Purchase Orders, Acceptable Investments
- Deed of Assignment of insurance, surety, and/or guarantee cover
- Deed of Assignment of Lease Rights
- Joint and Solidary Signature (JSS) of principal or key officers/co-makers
- Assignment of Franchise
Security Enhancers
- Post-Dated Checks
Documentary Requirements
Borrowers need to submit standard bank requirements based on the type of client, facility, and project. Additional pre-release requirements for franchisee-borrowers include a duly executed Franchise Agreement or Contract with the franchisor.
For more information, contact the Programs Management Department II at LANDBANK Plaza, or visit the nearest LANDBANK Lending Center.
Step-by-Step Guide to Apply for a Loan under this Program
Step 1: Check Eligibility
Before starting your application, confirm that your business meets the following eligibility requirements:
- Business Type: You must be a franchisee or franchisor in the franchising industry.
- SME Size Standards:
- Small Enterprises: 10-99 employees, ₱3,000,001–15,000,000 asset size.
- Medium Enterprises: 100-199 employees, ₱15,000,0001–100,000,000 asset size.
- Profitability: Your business must have been profitable for the past three years (except for start-ups).
- Ownership: At least 60% Filipino-owned if a partnership or corporation, or 100% Filipino-owned if a sole proprietorship.
- No Adverse Findings: There should be no adverse findings on the borrower/principals, and you must have a well-defined source of repayment.
Step 2: Visit a LANDBANK Lending Center
Go to any LANDBANK Lending Center to begin your application for a business loan or credit line under the Franchising Lending Program.
Step 3: Prepare Required Documents
Gather the necessary documents to support your loan application. Make sure all documents are up-to-date and complete.
General Requirements:
- LANDBANK Loan Application Form
- Bio-data of Borrowers: Include passport-size ID pictures.
- Certificate of Registration: Photocopy from DTI (for sole proprietorships) or SEC (for partnerships and corporations).
- Mayor’s Permit
- Financial Statements:
- Photocopy of Internal Tax Revenue and Audited Financial Statement for the last three years.
- Latest interim Financial Statement.
- Projected income statement, balance sheet, and cash flow statement with basic assumptions.
- Brief History of the Business
Additional Requirements for Partnerships and Corporations:
- Articles of Incorporation/Partnership and By-laws: Certified True Copy.
- Board Resolution: Authorizing management to obtain a loan from LANDBANK and designating the authorized signatories.
- Notarized List:
- Officers
- Partners
- Key Officers
- Board of Directors
- Principal Stockholders & Stockholdings
- Bio-data of Borrowers or Proprietors, Partners, Key Officers, and Board of Directors: Include passport-size ID pictures.
- Sworn Statement of Assets and Liabilities: For borrowers/proprietors, partners, key officers, and Board of Directors.
Step 4: Submit Your Application
Submit your completed application form along with all the required documents to the LANDBANK Lending Center.
- The bank will review your application and conduct an assessment based on your financial capacity and business plan.
Step 5: Await Approval
After submitting your application, await feedback from LANDBANK. The bank will evaluate your eligibility, the viability of your business, and your repayment capacity.
Step 6: Loan Disbursement
Once approved, the loan amount will be disbursed according to the agreed terms.
- For unit franchises, this is typically a one-time credit to your account.
- For area franchisees, developers, master franchisees, and franchisors, the disbursement may be staggered based on business needs and loan purposes.
Conclusion
The LANDBANK Franchising Lending Program offers a robust support system for franchisees and franchisors looking to expand or improve their businesses.
By providing accessible credit and clear guidelines, LANDBANK helps foster growth and stability in the franchising sector, contributing to the broader economic development of the Philippines.