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More people than ever are choosing to start their own businesses and as technology and connectivity continue to improve, its now possible to run online and virtual stores from anywhere in the world. In the Philippines, there are many workers taking advantage of the gig economy and some who have decided to earn a little extra cash from starting a side venture to supplement their initial income. If you’re thinking of starting a business but don’t have the capital to invest, this guide on how to use personal loans to start a small business may help.

Pay for the Essentials First

You will need to work out which items or subscriptions you cannot live without. For example, if you are planning to run an online store, it would be wise to invest in a good quality website, including protection of virtual attacks and fraud. Similarly, you will need a laptop and internet connection so you can check emails and customer feedback any time of the day. If you plan to start a physical business such as a small street food stall or mobile coffee cart, you will need to pay for any equipment you need and will also need to factor in things such as rents for marketplaces. Before you apply for a personal loan, make a list of the essentials first. This will give you the absolute minimum amount of money you need to borrow in order to get started. Though it does make sense to borrow a little more in case of emergencies, you must also be realistic when considering how much you can afford to repay each month.

Use Some of Your Profits to Pay off the Loan

It can take time for new businesses to develop and having to make regular loan payments for an extended period can make things more difficult, especially if your profit hasn’t been significant. In the early stages of the life of your business, make regular payments towards any personal loans you take out. If you can avoid using your own personal finances to pay the loan, this means that eventually, you will notice a huge increase in income. This method requires extreme self-discipline and relies on your business being profitable relatively quickly, but it can be done if you are dedicated enough.

Allocate funds for marketing

The word marketing may sound a little grandiose if you’re just thinking about selling some homemade jewellery and ornaments to tourists in the Philippines but whether you’re an online or offline business, its not an area you can overlook. Allocate funds for things like printed banners, stickers, business cards and adverts. This can feel like a large expenditure and quite a high risk, but if you invest enough time and effort into your marketing, it will pay dividends.

Set aside funds for tax and other charges

When you’re self-employed, you’re responsible for your own tax. This means you need to make sure you have enough to pay anything you on time, otherwise you can face fines and penalty payments. In the Philippines, the cost of living is generally much lower than many other parts of the world, so it should be possible to use even a small to medium personal loan for a business and still have enough left over for emergency payments and unexpected expenses.


If you operate in a premise, rather than your home, you will need business insurance. This covers you against accidents and provides peace of mind. Uninsured businesses run the risk as things like break ins, vandalism and fire are not accounted for. Insurance should be on your essentials list when you are planning how to use your personal loan. In the Philippines there are several insurance providers available and they can vary in terms of the value for money and the quality of the service they offer. As always, searching and comparing different providers before you make a final decision is highly recommended.


If you plan to sell physical products, you will need to pay for your stock before you open your business. Whether you need to buy in raw materials and craft the products yourself or whether you have an agreement with a local manufacturer, you will need to allocate a substantial part of your loan to cover the first batch of stock you order. Ensure you have done some research in to how much of it is likely to sell as this kind of investment is difficult to recoup if you have over ordered or miscalculated.


This is an optional expense for many small businesses and only necessary if you are planning to be a customer facing organisation. However, uniforms can make a small business appear far more professional to customers, so this could be a worthwhile spend if you are hoping to compete in an established market.


If you are planning to start a business that involves the use of a vehicle, always allocate some of your personal loan amount to account for things like maintenance, tax, insurance and repairs. Include the initial cost of any vehicles you plan to buy, but then factor in the extras so that you don’t run the risk of having to stop trading because of engine trouble or a flat tyre. In the Philippines, especially in tourist friendly areas, many mobile businesses such as ice cream vans and other food trucks make a good amount of profit. This is only possible with vehicles that are reliable and regularly serviced, though. Similarly, additional specific items for food related vehicles such as onboard fridges and cooking equipment can break down and will need to be replaced to avoid a sudden loss of income.


Businesses don’t have to cost a huge amount of money to set up but having a sum of money that you know has already been earmarked for certain essential expenditures means you can be fully focused growing your enterprise.

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