OWWA loan: What it is and how to get it

For overseas Filipino workers (OFWs) who plan on coming home one day, it’s important that they secure their financial future in the Philippines.

They can do this by saving and practising proper financial management. But they’ll also need a way to grow their wealth.

To do this, some OFWs choose to invest with their trusted banks, while other more enterprising Filipinos add to their savings and investments by opening their own businesses.

For those of you who choose the latter, keep in mind that a business needs consistent capital. While an OFW can dip into their savings at the start, they may need some help and training to keep their enterprise afloat without going broke.

This is where getting an OWWA loan comes in.

Contrary to popular belief, the Philippines’ Overseas Workers Welfare Administration (OWWA) only offers one type of loan through the OFW Enterprise Development and Loan Program (OFW-EDLP), an initiative it administers with the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP).

Once called the OFW Reintegration Program, the OFW-EDLP is a way for OFWs and their loved ones to start their own businesses closer to home.

By getting an OWWA loan, an enterprising OFW like you can get the capital to either open a business or to purchase the materials or equipment your existing business needs.

This brings you one step closer to being your own boss and finally going home for good.

According to OWWA, an OFW can use their OWWA loan to open the following:

• A business franchise
• A business partnership or cooperation with a top 1,000 corporation
• An agricultural or non-agricultural manufacturing venture
• A construction company or rental business
• A trading or service business
• A transportation company
  

But the sky’s the limit. If an OFW opens or has an existing business in the Philippines that will be able to earn enough to pay back the loan, then they can apply to join the OFW-EDLP.

It depends on how much an OFW needs for their business, as long as it covers at most 80% of a business’s starting capital or purchase cost.

The amount also varies if they are borrowing as a single proprietor or as members of a team in a partnership, corporation, or cooperative.

For a single proprietor, the minimum amount they can borrow is ₱100,000 with a maximum of ₱2 million. The minimum is the same for teams, though they can enjoy a bigger maximum loan amount of ₱5 million.

An OWWA loan under the OFW-EDLP can have a term as short as a year or at most seven years with a two-year grace period.

OFWs should also note that the loan has an interest rate of 7.5% per annum.

Yes. When an OFW decides to borrow money from the OWWA to fund their business, they must also agree to put that business on collateral.

That means if they can’t pay back the loan once it reaches maturity, the OFW must turn over their business or the equipment they purchased using the loan to OWWA.

Aside from their enterprise, OFWs may choose to declare other equipment or assets as collateral as long as these are items or properties that can be put on a mortgage. 

An OFW or team of OFWs qualify for an OWWA loan if they meet these criteria:

• They are an active or inactive OWWA member or group of members
• They have completed their Enhanced Entrepreneurial Development Training (EEDT) 
• They have an existing business or are opening a business within the first three years of their repatriation to the Philippines

If an OFW or their spouse will be older than 60 by the time their loan matures, they must also apply for an OWWA loan with a sibling or offspring who meets the following requirements:

• At least 18 years old
• Gainfully employed or has enough income to help repay the loan
• Will be younger than 61 upon loan maturity

It’s also important to note that only one OFW per family can apply. So if you, your spouse, and your adult offspring are all OFWs, only one of you can try for an OWWA loan.

Yes, as long as you have a representative.

If you’re single, widowed, or separated, a parent or your adult offspring can act as your representative in applying for an OWWA loan.

Meanwhile, a married OFW can be represented by their spouse through a Special Power of Attorney (SPA) validated by their nearest Philippine embassy or consulate. Through an SPA, a spouse can transact with LBP and DBP on the OFW’s behalf.

For their convenience, married OFWs and their spouses can also secure an SPA before leaving the Philippines.

To get an OWWA loan, follow these three steps:

1. Undergo a briefing, evaluation, and training at the nearest OWWA Regional Welfare Office to your permanent address.
2. Secure your Overseas Employment Certificate (OEC) or certification that you are an OFW and a certificate of completion for the EEDT.
3. Visit the nearest Land Bank Learning Centre or Lending Unit to evaluate your business plan and receive further instructions.
   

While it’s best to ask your nearest OWWA Regional Welfare Office or LBP about the documents you’ll need for an OWWA loan, you can at least come prepared with:

• Two valid IDs
• A bill showing your valid address
• A barangay certificate verifying your address 
• Your OEC or OFW certification
• Your EEDT certificate of completion
• Your or your business’s statement of assets and liabilities
• Your business registration and tax documents, if you have an existing business

If you open your own business, you can enjoy these perks:

• You can be your own boss – As a business owner, you call the shots and run the shop, farm, or company the way you see fit.
• You can play an important role in your community – Your business can create jobs for the people in your hometown. The goods or services you offer will also become part of your neighbourhood’s lifestyle.
• You set your own hours – As the boss, you can decide when you spend time with family and when you focus on helping the business grow. This gives you more control of your time than you would have as an employee.
• You own what you create – What you put into the business will be yours. You can also explore ideas that may have been shot down at your old job.
• You may earn a lot – Once profitable, you can make back the money you invested in the business and even have extra for you and your loved ones.
  

But with rewards comes risks. If you’re thinking about opening a business, you need to be ready for these challenges too:

• There may be days when funds are low – In business, there are ups and downs. And there may be days when you won’t be making as much as you had hoped.
• Your risk may not pay off – Despite the money you put into opening a business, it may not work out, leaving you with less savings than you had at the beginning.
• It will take a lot of effort – Keeping a business going will take your time, focus, and energy. There may be days when you work longer than you would have as an employee. And you’ll also have to deal with the stress of filing paperwork, paying the taxes on time, and managing suppliers and employees.
• You’ll have to make tough calls – You’re the boss now. So when it comes to firing people and closing branches or hiring more talent and expanding your business, you decide.
  

Whether you choose to invest in a business or save a little more, always choose a money remittance service that offers bank-level security whenever you send money to the Philippines. 

Kabayan Remit is government-registered and is regulated by the Financial Conduct Authority and Financial Transactions and Reports Analysis Centre in the United Kingdom and Canada, respectively.  

The app also lets you send funds from your phone straight to trusted e-wallets and banks in the Philippines, including:

• Banco de Oro (BDO)
• Bank of the Philippine Islands (BPI)
• Metrobank
• Rizal Commercial Banking Corporation (RCBC)
• GCash
• Maya

That means you can start saving or repaying your OWWA loan by using Kabayan Remit’s secure money transfer features.

To get started, open a free account here. You can also download the Kabayan Remit phone app on iOS or Android. 

Follow our easy prompts and start sending money to your loved one’s bank accounts, favourite remittance centre, or their e-wallets.

For more information, talk to our 24/7 bilingual customer support team here.