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Terms and Conditions

PNB Small Bank Loans are availed up to a 100 million peso limit. Applicants
may avail of two sub-types of the bank loan depending on the purpose, which
applicants are required to state.

2 Options:

RCL (Revolving Credit Line)

RCL’s are allowed for loans for capital purposes (working capital). They
mature in one year, and whose principal may be paid within 30 to 360 days (1 year).
A feature of the RCL is to reacquire payments already made on the principal should
the money be needed again.

RCL’s are given notices for loan renewal 3 weeks before maturity. If at
maturity the loan principal is paid, the bank reviews applicant performance over the
year, and if favorable, another RCL may be offered, although at a slightly lower
amount than the initial year loan (percentage decrease not standard, below 10%).


Term loans are allowed for asset expenditures and operational concerns.
They may be paid within three years.


A. Collateral
Bank loans require collateral. It may be real estate or chattel
mortgage. The requirements for real estate collaterals include Land Title, Tax
Declarations, Lot Plans, and the like. For chattel mortgage, vehicle
registration is required, among others. Generally, banks prefer real estate

B. Loan Computation

Loan amount is set by the bank and not the person applying for the
loan. It is determined by the collateral’s appraised value. For real estates,
these are within 60-70% of collateral value, and 50% for chattel mortgages.

The paying capacity of applicant is equally relevant. The projected

cash flows of the business is demanded of the applicant.

Multiple collaterals are possible to achieve the amount needed for


C. Processing Costs

Inspection (Appraisal) fee costs P 3,000. A character investigation fee, which

is a joint process with DTI and SEC) is a one time cost incurred amounting to
P1,500. lastly, Documentary stamps are deducted from the loan amount
received, as mandated by BIR of all banks. It costs P1.50 per P1000 of the
principal. There is no need to renew appraisal costs for loan extensions or
renewals. The investigation covers all stakeholders and involves validating
existence of businesses, credit histories, court cases, etc.

D. Mode of Payment

Upon receiving the loan, applicant makes a promissory note stating payment
terms. Generally, it is a compromise between the applicant and the bank on the
mode of payment. Principal may be a one-time payment (usually RCL), or spread
out to desired periods (like term loans), where periods may be monthly, quarterly,
or yearly. Interest may be accounted for the same way, although interest may be
discounted at the start. PNB’s interest rate is between 12-14%.

A. Additional Requirements

For start-ups, it is usually difficult to acquire a loan and may need a guarantor.
However, a good feasibility study is a plus for start-ups.

E. Penalties

Upon default at maturity, or “past due”, an additional 24% aside the interest is
added as penalty per annum. For lengthy past due status, there may be
foreclosure of collateral.

The applicant is expected to use the loan in the stated purpose. Violation
results in acceleration clause, in which the principal and due payments become
due immediately.


Name: Edilberto R. Marcos, C.P.A.

Branch: PNB Meycauayan Branch
Employment: Has been a PNB employee for more than 20 years.