Commercial Building Construction Loan Philippines: Which Banks Offer It and How to Qualify

What Is a Commercial Building Construction Loan in the Philippines?

A commercial building construction loan is a specialized type of financing used to fund the construction of income-generating properties — think office buildings, retail spaces, warehouses, mixed-use developments, or commercial condominiums. Unlike a standard home loan that releases funds in a lump sum, construction loans in the Philippines typically release funds in tranches tied to construction milestones.

This phased drawdown structure protects both the bank and the borrower. You only pay interest on the amount drawn, which keeps costs manageable during the construction phase. Once the building is complete, the loan either converts into a term loan or is refinanced entirely.

Whether you're a real estate developer, a business owner building your own commercial space, or an investor adding a commercial property to your portfolio, understanding how these loans work is the first step toward securing the right financing.

Which Philippine Banks Offer Commercial Building Construction Loans?

Several major banks in the Philippines actively lend for commercial construction, though availability, appetite, and terms vary significantly by institution. Here's what you need to know about each:

BDO Unibank

BDO is one of the most active commercial real estate lenders in the country. Their corporate banking division handles large commercial construction deals, while their SME division can accommodate smaller commercial projects. BDO typically lends up to 60–70% of the appraised project value, with loan terms of up to 10 years for commercial properties after construction completion.

BPI (Bank of the Philippine Islands)

BPI offers commercial real estate loans through its corporate and SME segments. They are known for competitive pricing on well-structured deals and have dedicated relationship managers for property financing. BPI generally requires a strong track record from developers or significant business revenue from owner-occupiers. If you're also exploring residential refinancing options, you can check BPI housing loan interest rates for 2026 as a reference for their general lending posture.

Metrobank

Metrobank is a major player in the commercial real estate lending space. Their property finance team handles both construction and take-out loans. They tend to favor projects in Metro Manila and major provincial cities with proven demand drivers. For those who later want to refinance their completed commercial property, Metrobank's refinancing options are also worth exploring.

Security Bank

Security Bank has been increasingly active in commercial real estate lending, particularly for mid-market developers and business owners constructing their own premises. They are known for faster credit decisions compared to some larger banks and are willing to consider projects in growth corridors outside Metro Manila.

RCBC

Rizal Commercial Banking Corporation offers commercial construction financing primarily through its corporate banking group. RCBC is particularly active in industrial and logistics-related construction financing, making them a strong option if you're building a warehouse or light industrial facility.

UnionBank

UnionBank has been growing its commercial lending portfolio. Their digital-forward approach means a somewhat smoother application experience. They tend to focus on mid-market businesses and developers with solid financials.

PNB and Landbank

Philippine National Bank and Land Bank of the Philippines are both active in commercial real estate, with Landbank particularly focused on agri-commercial and rural development projects. PNB tends to be more flexible on geography and can accommodate provincial commercial construction where private banks may be hesitant.

Pag-IBIG (HDMF)

Pag-IBIG primarily serves residential borrowers, but their developer financing programs can apply to mixed-use projects with a significant residential component. Pure commercial construction is generally outside their mandate.

How Much Can You Borrow?

Commercial construction loan amounts in the Philippines vary widely based on the bank, the project type, and your financial profile. Here are the general parameters:

• Minimum loan amount: Most banks set a floor of 3,000,000 to 5,000,000 for commercial construction loans through their SME divisions. Corporate deals can start at 20,000,000 or higher.
• Maximum loan-to-value (LTV): Banks typically lend up to 60–70% of the total project cost (land plus construction), though some may go up to 75% for strong borrowers.
• Loan term: Construction periods typically run 12–24 months, followed by a term loan of 5–15 years depending on the bank and project type.

For example, if you're constructing a commercial building with a total project cost of 20,000,000, a bank lending at 70% LTV would provide up to 14,000,000 in financing. You would need to cover the remaining 6,000,000 in equity — typically proven through land ownership (if unencumbered) or cash equity invested in construction to date.

Interest Rates on Commercial Construction Loans

Interest rates for commercial construction loans are generally higher than standard residential mortgage rates, reflecting the additional risks involved. As of 2025, you can expect the following ranges:

• Construction phase interest rate: 7% to 10% per annum, typically on a floating or annually repriced basis
• Term loan phase (post-completion): 7.5% to 11% per annum, depending on the bank, loan tenure, and borrower profile
• Fixed-rate periods: Some banks offer 1–3 year fixed rate periods; longer fixed terms are rare in commercial lending

Rates are quoted on a per annum basis and calculated on the outstanding balance. During construction, you only pay interest on tranches already drawn — so if your loan facility is 14,000,000 but only 6,000,000 has been released so far, your interest billing is based on the 6,000,000.

Eligibility Requirements: What Banks Look For

Qualifying for a commercial construction loan is more demanding than getting a standard housing loan. Banks conduct thorough due diligence on both the borrower and the project. Here's what they typically evaluate:

Borrower Requirements

• Business track record: At least 2–3 years of profitable operations for corporate borrowers; developers typically need a portfolio of completed projects
• Financial statements: Audited financial statements for the past 2–3 years; banks look for consistent revenues, healthy margins, and manageable debt levels
• Debt service coverage ratio (DSCR): Most banks require a DSCR of at least 1.2x to 1.5x, meaning your net operating income (or business cashflow) should be 1.2–1.5 times your projected loan repayment
• Credit history: Clean credit record with no major defaults; banks check with the Credit Information Corporation (CIC)
• Equity contribution: Borrowers must demonstrate 30–40% equity in the project, often through land ownership or cash already invested

Project Requirements

• Feasibility study: A credible feasibility study showing projected revenues, occupancy rates, and returns — especially for investment properties
• Building permits: You'll need a building permit from the local government unit (LGU), conforming to the National Building Code and zoning regulations
• Approved plans: Architectural and engineering plans approved by a licensed architect and engineer
• Construction contract: A signed contract with a licensed contractor, typically accompanied by a bill of quantities and project timeline
• Clean title: The land must have a clean Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) free of encumbrances, or the mortgage must be acceptable to the bank

The Loan Drawdown Process

Unlike residential loans, commercial construction financing is released in stages tied to construction progress. Here's how a typical drawdown schedule works:

1. Initial drawdown (20–30%): Released upon loan approval and submission of a building permit, to fund early construction activities like excavation and foundation work
2. Progress drawdowns (multiple tranches): Released as construction milestones are achieved — typically at 25%, 50%, and 75% completion, verified by a bank-appointed appraiser or inspector
3. Final drawdown (10–15%): Released upon substantial completion, submission of occupancy permit, and final inspection

Each drawdown request requires submission of progress billings from your contractor, inspection reports, and updated construction photos. The bank's appraiser will conduct site visits to verify actual completion percentages before releasing funds.

What Happens After Construction? The Take-Out Loan

Once your commercial building is complete, the construction loan typically converts into a regular term loan — sometimes called a take-out loan or permanent financing. This is where your ongoing repayments begin in earnest.

At this stage, many borrowers discover that the rates negotiated during the construction phase are no longer competitive, especially if market rates have shifted or if their property's value and their business profile have improved. Refinancing at this point can make significant financial sense.

For instance, if your take-out loan is 12,000,000 at 9.5% per annum over 15 years, your monthly amortization would be approximately 125,300. At a refinanced rate of 7.5%, the same loan would cost approximately 111,100 per month — a savings of around 14,200 per month, or 170,400 annually.

Nook helps Philippine property owners compare refinancing options across multiple banks to find the best available rate. Our service is completely free to borrowers — banks pay us a referral fee, so you never pay us anything directly.

Key Tips for Applicants

• Prepare your documents early: Commercial loan applications require significantly more documentation than residential loans. Start gathering audited financials, permits, and project plans at least 3–6 months before you need the funds.
• Get a detailed feasibility study: Even if your bank doesn't require it, a credible feasibility study strengthens your application and demonstrates project viability.
• Shop multiple banks: Rate and term differences across banks can be substantial. Don't accept the first offer — always compare at least 3 banks before committing.
• Understand the repricing terms: Ask specifically when and how your interest rate will reprice after the initial fixed period, and what index it's tied to.
• Plan for contingencies: Construction projects regularly exceed budgets. Make sure your financing structure includes a contingency buffer or that you have access to additional equity if costs overrun.
• Work with professionals: Engage a licensed architect, contractor, and if possible, a property financial advisor who understands bank requirements in the Philippines.