What Is a Commercial Construction Loan in the Philippines?
A commercial construction loan is a short-to-medium-term credit facility that finances the construction of income-generating properties — think office buildings, warehouses, mixed-use developments, retail strips, hotels, and apartment complexes. Unlike a standard home loan, the funds are released in tranches tied to construction milestones rather than as a lump sum, and the loan typically converts to a term loan once the building reaches completion and occupancy.
In the Philippines, commercial construction lending sits at the intersection of real estate finance and project finance. That means banks scrutinize not just the borrower's creditworthiness but also the viability of the project itself — projected rental income, pre-selling or pre-leasing progress, contractor track record, and the appraised value of the completed property.
Who Needs a Commercial Construction Loan?
Commercial construction loans serve a wide range of Filipino borrowers and entities:
- Real estate developers building condominium towers, subdivisions, or commercial centers
- Business owners constructing their own office, warehouse, or factory
- Landlords and investors putting up apartment buildings or BPO-ready office space
- Hospitality entrepreneurs building boutique hotels, resorts, or pension houses
- Corporations expanding their operational footprint with a new headquarters or logistics hub
If the property you are building is intended to generate income — or to house your own commercial operations — a commercial construction loan is almost certainly the right product for you.
Top Banks Offering Commercial Construction Loans in the Philippines (2026)
Most of the country's major universal and commercial banks offer construction financing, though product names, structures, and appetite vary significantly. Here is a practical overview of the key players:
BDO Unibank
BDO is the Philippines' largest bank by assets and one of the most active lenders in commercial real estate. Their construction loan facility can accommodate large-ticket projects — often starting at 20,000,000 and going well into the billions for established developers. BDO typically offers fixed-to-floating rate structures, with initial fixed periods of one to three years before repricing to a spread over their benchmark rate. Loan-to-value (LTV) ratios for commercial construction generally run between 60% and 70% of the appraised completed value.
BPI (Bank of the Philippine Islands)
BPI is a preferred lender for mid-market developers and corporate borrowers. Their commercial real estate loans are well-structured and their credit process is known for thoroughness and relative speed among large banks. BPI also offers project finance advisory alongside lending, which can be valuable for first-time developers.
Metrobank
Metrobank has a strong commercial real estate portfolio and is particularly active in Metro Manila and key provincial cities. They are willing to finance mixed-use developments and have experience with complex project structures involving multiple corporate entities.
Security Bank
Security Bank is known for competitive pricing and a more flexible credit appetite on commercial real estate. Their relationship banking model means borrowers often get more direct access to decision-makers, which can speed up approvals. If you already have an existing mortgage with Security Bank and are looking at refinancing once construction completes, you can explore options through Security Bank housing loan refinancing via Nook.
RCBC (Rizal Commercial Banking Corporation)
RCBC is active in both residential and commercial construction lending, with a growing presence in provincial markets. They are a solid option for developers working outside Metro Manila. Borrowers who complete construction and want to refinance the resulting term loan at a better rate can look into RCBC housing loan refinancing through Nook.
PNB (Philippine National Bank)
PNB has strong government-sector relationships and is a credible option for larger commercial projects, especially those with some government nexus or those in infrastructure-adjacent sectors like logistics and light industrial.
UnionBank and EastWest Bank
Both banks are growing their commercial real estate books and are worth approaching, particularly for mid-sized projects in the 20,000,000 to 200,000,000 range where the largest banks may be less attentive.
Pag-IBIG (HDMF)
Pag-IBIG primarily serves residential borrowers and socialized housing, but their end-buyer financing programs are critical for residential developers who need to ensure their buyers can access take-out financing once units are turned over. For pure commercial construction, Pag-IBIG is generally not applicable.
Current Interest Rates on Commercial Construction Loans (2026)
Interest rates on commercial construction loans in the Philippines are meaningfully higher than residential mortgage rates, reflecting the additional complexity and risk. As a practical benchmark for 2026:
- Indicative construction period rate: 8.00% to 12.00% p.a., depending on project size, borrower profile, and bank
- Term loan rate (post-completion): typically repriced to 7.00% to 10.00% p.a. on a fixed-to-floating basis
- Typical fixed period: 1 to 5 years, after which the rate floats at a spread over the bank's base rate or BVAL
Rates are always negotiable for strong borrowers with good collateral, a track record of completed projects, and healthy pre-selling or pre-leasing numbers. Presenting multiple competing term sheets — which Nook helps facilitate — is one of the most effective ways to push your rate down.
For context, the best available refinance rate through Nook's panel of lenders is currently 5.99% p.a. — this is the floor that disciplined residential borrowers can target once their construction converts to a term loan and they shop the market aggressively.
Eligibility Requirements: What Banks Look For
Commercial construction loan applications are evaluated on two levels simultaneously: the borrower and the project. You need to satisfy both.
Borrower Requirements
- Filipino citizen or corporation with at least 60% Filipino ownership (for land-secured deals)
- Minimum of two to three years of profitable operating history (for corporations)
- Clean credit history — no unsettled NPLs or restructured loans
- Sufficient net worth relative to the loan amount requested
- Demonstrated track record in real estate or the relevant commercial sector
Project Requirements
- Clear title on the land (Transfer Certificate of Title in the name of the borrower or mortgageable to the bank)
- Approved building permit and all necessary regulatory clearances (HLURB/DHSUD for residential components, LGU permits)
- Detailed construction plan and bill of quantities from a licensed engineer
- Signed contract with a reputable general contractor
- Feasibility study with financial projections covering the construction period and at least five years of operations
- Pre-selling or pre-leasing evidence (typically 20% to 30% of units/space committed before drawdown begins)
Typical Loan Structure and Drawdown Process
Understanding how a commercial construction loan actually works in practice will help you plan your cash flows more accurately.
Construction Period
Funds are released progressively — usually in four to six tranches — as the contractor reaches defined milestones verified by the bank's appointed appraiser or project engineer. During this period, many banks require interest-only payments on the drawn-down amount. If you have drawn 40,000,000 of a 100,000,000 facility at 10% p.a., your monthly interest cost is approximately 333,333.
Conversion to Term Loan
Once construction reaches substantial completion (typically defined as issuance of the Certificate of Occupancy), the outstanding balance converts to a term loan. At this point, the full principal plus interest repayment schedule kicks in. The term can range from five to twenty years depending on the bank and the project type.
Loan-to-Value (LTV) Ratios
Banks typically lend 60% to 70% of the appraised value of the completed property. This means if your completed building is appraised at 150,000,000, the maximum loan is approximately 90,000,000 to 105,000,000. You need to fund the balance — plus any cost overruns — from your own equity.
Required Documents: A Practical Checklist
Preparing a complete application package upfront dramatically reduces back-and-forth with the bank. Gather the following before approaching any lender:
- Duly accomplished loan application form
- Company registration documents (SEC Certificate, Articles of Incorporation, General Information Sheet)
- Audited financial statements for the past two to three years
- Latest BIR-filed income tax return
- Board resolution authorizing the loan and the authorized signatories
- TCT or CCT of the collateral property (certified true copy from the Registry of Deeds)
- Tax declaration and real property tax receipts
- Approved building permit and architectural/engineering plans
- Bill of quantities and construction cost estimate
- General contractor's profile, license, and signed construction agreement
- Project feasibility study and financial model
- Pre-selling or pre-leasing documentation (reservation agreements, letters of intent)
Tips to Improve Your Chances of Approval
Commercial construction lending is relationship-driven and highly judgment-based. Here is how experienced developers maximize their approval odds and negotiate better terms:
- Start with your existing bank. A strong existing relationship gives you a credibility head start. Banks price risk partly on how well they know you.
- Demonstrate equity commitment. Banks want to see that you have meaningful skin in the game. A 30% to 40% equity contribution signals seriousness and reduces bank risk.
- Secure pre-commitment from end-users. Pre-selling or pre-leasing data is enormously powerful in credit committees. Even letters of intent — not just signed contracts — help.
- Use a reputable general contractor. Banks have watched projects fail because of contractor default. A Tier-1 GC with a proven track record reduces perceived risk materially.
- Engage an independent quantity surveyor. This adds professional credibility to your cost estimates and gives the bank confidence your budget is realistic.
- Shop multiple lenders simultaneously. Getting competing term sheets creates negotiating leverage on rate and structure. This is exactly the process Nook facilitates for you.
From Construction to Refinancing: The Full Lifecycle
One aspect many developers and commercial property investors overlook is the refinancing opportunity that arises once construction is complete and the property is stabilized. Construction loans carry higher rates precisely because of the construction-period risk. Once your building is standing, tenanted, and generating income, you become a dramatically lower-risk borrower — and you should be paying a dramatically lower rate.
This is where working with a mortgage broker like Nook becomes especially valuable. Once your commercial construction converts to a term loan, Nook can help you shop your loan across multiple lenders to secure the most competitive refinancing rate available — down as low as 5.99% p.a. for the strongest profiles. That rate difference, compounded over a 15 to 20-year term on a loan of 50,000,000 or more, can translate into tens of millions of pesos in interest savings.