How to Verify the Legitimacy of a Lending Company in the Philippines
An up-to-date legal primer (July 2025)
Disclaimer: This material is for general information only and does not constitute legal advice. Laws and regulations may change; always consult the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP) or a qualified Philippine lawyer before acting on any information herein.
1. Why “verification” matters
Unregistered or fly-by-night lenders routinely:
- Impose interest and charges far beyond what the Bangko Sentral caps for small-value loans.
- Harvest borrowers’ entire contact lists and threaten public “shaming.”
- Disappear—leaving no recourse for unlawful collections or refunds.
Under Republic Act (RA) 9474 — The Lending Company Regulation Act of 2007, operating a lending company without the proper SEC Certificate of Authority (CA) is a criminal offense, punishable by fines, imprisonment, or both.
2. Governing laws & rule-makers
| Regulator | Core legal bases | Scope relevant to lending |
|---|---|---|
| SEC | • RA 9474 (Lending Companies) • RA 8556 (Financing Companies) • SEC Memorandum Circulars (MC) 18-2019, 19-2019, 10-2021, 16-2019, etc. |
Incorporation, Certificate of Authority, online-lending-app (OLA) registration, collection-practice rules, administrative fines |
| BSP | • RA 7653 & 8791 (banks) • RA 11765 (2022) Financial Consumer Protection Act • BSP Circulars 730 (Truth-in-Lending rules), 1133 (interest-rate ceilings for payday and small-value loans), etc. |
Deposit-taking entities, digital banks, consumer-protection ceilings, credit-card & pawnshop rules |
| Co-operative Development Authority (CDA) | RA 9520 (Co-op Code) | Lending by registered cooperatives |
| National Privacy Commission (NPC) | RA 10173 (Data Privacy Act) & NPC circulars | Lawful personal-data processing, restrictions on harvesting contacts/photos |
| Local Government Units (LGUs) | Local Government Code; city/municipal ordinances | Business permits, mayor’s permit, zoning compliance |
3. Who may lawfully extend credit?
| Entity type | Key permit(s) | Typical loan products |
|---|---|---|
| Banks / Thrift & Rural Banks | BSP banking license, SEC registration | Consumer, salary, micro-enterprise, credit cards |
| Lending Companies (RA 9474) | SEC Certificate of Incorporation and SEC Certificate of Authority | Unsecured salary/personal loans, small-business loans |
| Financing Companies (RA 8556) | SEC Certificate of Incorporation and SEC CA for Financing | Auto, equipment, real-estate, salary loans |
| Digital/Neobank branches of foreign entities | BSP digital-bank license, SEC registration | Mobile-app consumer loans, e-wallet top-ups |
| Co-operatives / Credit Unions | CDA registration + surety fund compliance | Member loans, agri/SME lending |
| Microfinance NGOs (RA 10693) | SEC registration + Microfinance NGO certificate | Micro-enterprise loans ≤ ₱300k |
⭑ Sole proprietorships CANNOT be lending or financing companies; RA 9474 requires corporate form.
4. Documents a legitimate lender must hold
| Document | Where to see / request | Legal basis |
|---|---|---|
| SEC Certificate of Incorporation | Framed in office or via SEC “Verify Company” portal | Corporation Code |
| SEC Certificate of Authority (CA) to Operate as a Lending/Financing Co. | Displayed conspicuously; borrower is entitled to a copy on request | RA 9474 §4; RA 8556 §4 |
| Business/Mayor’s Permit & BIR Registration | City Hall / BIR offices | Local Government Code; NIRC |
| Disclosure Statement on Loan/Credit Transaction | Must be given before contract signing | RA 3765 (Truth in Lending Act); BSP Circular 730 |
| Data-Privacy Consent Form | Attached to application form / app splash screen | RA 10173; NPC Advisory 2022-01 |
| Updated OLA Registration Number (if loans are applied for through a mobile app) | SEC List of Registered Online Lending Platforms | SEC MC 19-2019 |
5. Step-by-step verification checklist
Search the SEC database Use either:
- SEC eSPARC / CRS (Company Registration System) – type the company name or registration number.
- SEC i-View kiosk/online (for PDFs of the CA). If no CA appears, the entity cannot legally lend.
Check the SEC Advisories page The Enforcement and Investor Protection Department (EIPD) regularly posts bulletins naming unregistered or black-listed lenders/OLAs.
Cross-check with BSP lists • List of BSP-supervised financial institutions (BSFIs) for banks, credit card issuers, digital banks. • Ceilings on interest & fees (BSP Memorandum M-2022-028 caps payday-loan effective interest at 0.15% per day and processing fees at ₱500).
Verify CDA number (for co-ops) Use the CDA Cooperative Registry System. Lending outside membership is unlawful.
Inspect the physical office & signage RA 9474 requires the CA number be printed on “all forms of advertisements,” from billboards to Facebook posts. Lack of CA in ads is a red flag.
Demand originals/certified true copies Under the Financial Products and Services Consumer Protection Act (RA 11765), firms must provide these on reasonable request—free of charge.
Review the loan agreement Ensure:
- The Disclosure Statement shows the Annual Percentage Rate (APR), finance charge, and any default penalty in pesos and percent.
- No blank spaces or unilateral change clauses (void under Article 1390 Civil Code & RA 7394 Consumer Act).
Scrutinize data-privacy consent Legit lenders list specific data to be collected and the purpose. Blanket “access all contacts/photos” consents violate NPC Circular 2021-01.
6. Compliance indicators vs. red flags
| Compliance signs | Red flags |
|---|---|
| CA number on every post/website/app store listing | “Processing fee” collected before cash release |
| Staff can produce notarized CA & mayor’s permit | Only social-media page, no office address |
| Clear breakdown of interest & fees in pesos | “Interest depends on credit score” with no APR |
| NPC registration number in privacy policy | Requires uploading entire contact list |
| Invoice/official receipt bearing BIR “Ask for receipt” logo | Threats of “public shaming,” expletive-laden collection texts |
7. What if the lender is not legitimate?
7.1 Administrative & criminal sanctions
| Violation | Possible penalties |
|---|---|
| Operating without CA | RA 9474 §12: ₱10 000 – ₱50 000 fine or 6 mos – 10 yrs imprisonment (or both); SEC may issue Cease & Desist Order (CDO) |
| Unfair or abusive collection | SEC MC 18-2019: fines up to ₱1 000 000 plus ₱2 000/day; recommendation for criminal prosecution under RA 11765 |
| Data-privacy intrusion | NPC may impose up to ₱5 000 000 per violation; criminal liability under §33 of RA 8792 (e-commerce law) if hacking is involved |
| Usury-level charges disguised as fees | Possible prosecution for estafa (Art. 315 Revised Penal Code) & civil nullity of contract |
7.2 Where & how to complain
| Complaint type | Where to file | Documentary tips |
|---|---|---|
| Unregistered lending / abusive collection | SEC-EIPD (sec.gov.ph > File a complaint) | Screenshots, loan contract, proof of payment |
| Banks, credit-card, pawnshop issues | BSP Financial Consumer Protection Department (consumeraffairs@bsp.gov.ph) | Complaint letter, IDs, account numbers |
| Privacy / doxxing / spam | National Privacy Commission (complaints@privacy.gov.ph) | Screenshots of intrusive permissions, threatening messages |
| Cyber harassment / threats | PNP Anti-Cybercrime Group or NBI-CCD | Print-outs, phone logs |
8. Special topics
8.1 Online Lending Apps (OLAs)
SEC MC 10-2021 & MC 19-2019 require OLAs to:
- Register the app name and the corporate entity.
- Submit screenshots, data-flow diagrams, and third-party service contracts.
- Prohibit accessing a borrower’s contact list except for two nominated guarantors.
The SEC publishes a “List of Registered OLAs” and a separate “List of Banned/Removed OLAs.” Always cross-check an app before installing.
8.2 Crowdfunding & Peer-to-Peer (P2P) platforms
Covered by SEC MC 14-2019 (Crowdfunding Rules). A platform must:
- Register as a Crowdfunding Intermediary or Funding Portal.
- Disclose default rates and escrow arrangements. Borrowers dealing with P2P should verify both the intermediary’s registration and the underlying lending company’s CA.
8.3 Interest-rate ceilings & “no usury” myth
The Usury Law’s ceilings were lifted in 2013, but BSP retains power to set ceilings under the New Central Bank Act. Current caps (BSP Memorandum M-2022-028):
- Nominal interest: 0.15 % per day (≈ 54 % effective annual) for loans ≤ ₱10 000, tenor ≤ 4 months.
- Processing fee: maximum ₱500. Anything beyond that invites BSP sanctions and contract reformation by courts.
9. Practical borrower checklist (printable)
☐ I located the lender and its CA on the SEC website. ☐ The CA number is printed on ads/social-media posts. ☐ I obtained copies of the CA, mayor’s permit, BIR registration. ☐ I received a Disclosure Statement detailing the APR and every peso of charges. ☐ Interest + fees are within BSP ceilings. ☐ The privacy consent lists exact data to be collected. ☐ The loan contract shows no blank spaces. ☐ I kept digital & hard copies of all signed documents and receipts. ☐ Emergency contacts understand they may be called. ☐ If doubts arise, I know how to file with SEC-EIPD/NPC/BSP.
10. Conclusion
Verifying a lending company in the Philippines is largely a desktop exercise—a few minutes on the SEC and BSP portals reveal 90 % of red flags. Borrowers who recognise a missing Certificate of Authority or an abusive contact-harvesting practice can avoid ruinous interest, public shaming, and identity theft.
The legal landscape—anchored on RA 9474, RA 8556, RA 11765 and the Data Privacy Act—empowers consumers to demand transparency and fair treatment. Make use of it before signing that promissory note or downloading that loan app.
Stay vigilant, keep records, and report violators. Legitimate credit should build, not break, the Filipino borrower.