Verifying Licensed Lending Companies in the Philippines – 2025 Legal Guide (All citations are to Philippine statutes, SEC circulars and court decisions available in the public domain.)
1 | Why verification matters
- Lending companies handle consumer and small-business credit. Operating without a licence exposes the public to predatory terms and abusive collection practices, and exposes the operator to criminal liability.
- Since 2019 the Securities and Exchange Commission (SEC) has revoked or denied more than a thousand Certificates of Authority (CAs) and ordered dozens of unregistered online lending apps (OLPs) shut down. Borrowers, investors and even payment-service providers are now expected to check a lender’s licence before doing business.
2 | Governing statutes and rules
| Instrument | Core points |
|---|---|
| Republic Act (RA) 9474 – Lending Company Regulation Act of 2007 | Creates the licensing regime; makes SEC the primary regulator; sets minimum capital, ownership limits and penalties. |
| SEC Implementing Rules & Regulations of RA 9474 (2008, as amended) | Details incorporation, application forms, fit-and-proper tests, prudential and reporting rules. |
| SEC Memorandum Circular (MC) 3-2022 | Caps the cost of credit from lending/financing companies and OLPs: nominal interest ≤ 6 % per month; effective interest ≤ 15 % per month; service fee ≤ 5 % of principal; penalty ≤ 0.5 % per day. |
| SEC MC 18-2019 | Prohibits abusive collection (threats, public shaming, contact outside 8 a.m.–9 p.m., accessing phone contacts, etc.). |
| SEC MC 19-2019 | Requires prior SEC approval for each Online Lending Platform and sets website-/app-disclosure standards. |
| Financial Products and Services Consumer Protection Act (RA 11945, 2022) | Enshrines borrowers’ rights; empowers the SEC to award restitution and impose fines up to ₱2 million plus daily penalties. |
| Anti-Money Laundering Act (RA 9160, as amended) & 2021 IRR | Treats lending/financing companies as “covered persons”; requires registration with AMLC, risk assessment, KYC and transaction reporting. |
| Data Privacy Act (RA 10173) & NPC Circulars | Governs borrower data processing and sets breach-notification duties. |
Related regimes: financing companies (RA 5980, as amended), credit cooperatives (Co-op Code & CDA rules), microfinance NGOs (RA 10693), pawnshops and money service businesses (BSP rules).
3 | What counts as a “lending company”
A lending company (LC) is any stock corporation other than a bank, financing company, or cooperative that grants loans from its own capital funds. The borrower may be an individual or a business; collateral is optional. An LC may not solicit deposits or issue quasi-bank liabilities.
- Financing company (FC) – larger capital floor (₱10 million), allowed to borrow more heavily from banks, and often in asset-based or project finance.
- Informal “5-6” lenders – individuals or partnerships charging high daily interest; always unlicensed under RA 9474.
4 | Licensing roadmap
Incorporation at SEC
- Form: stock corporation (one-person corporation permitted since RA 11232 but uncommon in LCs).
- Minimum authorised capital stock: ₱1 million. At least 25 % subscribed and 25 % of that paid-up (≥ ₱62 500).
- Foreign equity ceiling: 49 % of outstanding voting stock. Full foreign ownership is barred because lending is “partly nationalised” under the Foreign Investments Negative List.
Application for Certificate of Authority (CA) Submit within 60 days from incorporation, otherwise the SEC may suspend the primary licence. Key attachments:
- board resolution authorising application;
- sworn business plan and credit policies;
- NBI & police clearances and statement of moral fitness of directors/officers;
- proof of paid-up capital (bank certificate or auditor’s report);
- AML compliance framework and Data Privacy manual.
Fit-and-Proper test Officers and directors must have no conviction involving moral turpitude, no SEC/ BSP disqualification, and no pending warrant for estafa or similar crimes.
SEC evaluation & release of CA
- Processing time: ~30 calendar days if complete.
- Statutory fee: ₱10 000 + ₱1 per ₱1 000 of authorised capital; plus ₱1 200 legal research fee.
Secondary registrations and permits
- Local government unit (LGU): Mayor’s/business permit.
- BIR: Registration, official receipts, books of accounts.
- AMLC: enrolment in the online reporting portal.
- National Privacy Commission: data-processing registry for high-risk operations.
- SEC eFAST account: electronic filing of reports.
5 | Ongoing compliance duties
| Obligation | Frequency / trigger |
|---|---|
| Audited Financial Statements (AFS) | Within 120 days after fiscal year end. |
| General Information Sheet (GIS) | Within 30 days from annual stockholders’ meeting. |
| Quarterly Financial Statements (QFS) | Within 45 days from quarter-end. |
| AMLC covered-transaction report (single cash transaction ≥ ₱500 000) | Within 5 BD. |
| Suspicious-transaction report | Within 5 BD from determination; “no safe harbour” delay. |
| Interest-rate and fee caps (MC 3-2022) | Must be baked into contracts and disclosures; SEC reviews sample contracts ad hoc. |
| Collection-practice audit | Random check by SEC Enforcement & Investor Protection Dept. |
| Renewal of OLP authority | Every time a new mobile app is launched or platform ownership changes. |
6 | How to verify that a lender is licensed
SEC “List of Registered Lending Companies with CAs” Downloadable excel file, updated monthly. Each entry shows the corporate name, CA number and status (active, revoked, expired).
eFAST/Company Registration System (CRS) search Enter the corporate name. An active LC will show two live licences: SEC Registration and Certificate of Authority to Operate as a Lending Company.
Check the CA itself Licensed lenders must display the original certificate at their principal place of business and on every online platform. The CA bears: corporate name, CA number, date of issue, signature of the SEC Chair or representative.
Cross-match business permits Verify that the company’s mayor’s permit uses the same corporate name and principal address as the CA.
Red-flag indicators
- Use of personal bank accounts or e-wallets in collecting repayments;
- Contract references to a DTI certificate (the DTI licenses sole proprietors, not corporations);
- Interest stated only in absolute peso amounts (to mask >6 % monthly rate);
- Hidden “service fee” > 5 % or daily penalty > 0.5 %.
Tip: Always capture screenshots of the CA and full loan disclosures before signing.
7 | Online Lending Platforms (OLPs)
Only an LC or FC that already holds a CA may host an OLP; one OLP per company, with the exact corporate name appearing in the app-store listing.
Prior SEC approval is required before publishing the app. An OLP running or downloadable without proof of “Approval No. OLP-----” is illegal.
An OLP must:
- provide a rate calculator and sample amortisation schedule;
- obtain express, granular consent before accessing phone data (no contacts scraping);
- allow cancellation of data access at any time without disabling loan-servicing functions;
- display a complaints e-mail and phone line manned at least 10 hours per day.
8 | Penalties for unlicensed or non-compliant lending
| Violation | Statutory sanction |
|---|---|
| Operating without a CA | RA 9474 § 12: Fine ₱10 000 – ₱50 000 and/or imprisonment 6 months – 10 years; automatic closure; forfeiture of collected interest. |
| Using two or more deceptive corporate names | Revocation of CA; administrative fine up to ₱1 million per violation. |
| Excessive interest / charges | Restitution of over-collection; daily fine up to ₱10 000 (MC 3-2022). |
| Abusive collection | Suspension of CA; individual debt collector may be permanently disqualified from the industry (MC 18-2019). |
| AMLA failure (e.g., non-reporting) | AMLC penalty up to ₱3 million per infraction; possible criminal indictment. |
| Data-privacy breach | NPC fine up to 5 % of annual gross income or ₱5 million, whichever is higher; imprisonment for sensitive-personal-info leaks. |
The SEC may apply for an ex-parte asset freeze at the Court of Appeals to preserve borrowers’ funds.
9 | Regulatory trends (2019 – July 2025)
- Mass revocations: The SEC has revoked ≈ 1100 CAs and blocked > 700 OLPs for unlicensed operation or abusive practices.
- Interest-rate cap: First imposed in March 2022, the 6 %/15 % ceiling significantly reduced “payday-type” APRs but led to a migration of questionable operators to informal channels and social-media lending.
- Joint enforcement with NPC & AMLC: Data-privacy and AML breaches are now routinely cited in SEC cease-and-desist orders (CDOs).
- Financial Consumer Act rules (2024-2025): Lending companies must now establish a Financial Consumer Protection Office, maintain a complaints management system and submit Quarterly Consumer Welfare Reports.
10 | Practical guidance
For would-be lenders / investors
- Due diligence: review the CA, latest AFS, GIS and AMLC registration certificate.
- Board composition: ensure non-Filipino directors do not exceed foreign-equity limits.
- Capital calls: confirm paid-up capital is deposited in the corporate bank account, not cycled via advances from directors.
For borrowers
- Verify the company name and CA number against the SEC list before installing an app or signing a contract.
- Keep digital copies of the disclosure statement; the Truth-in-Lending Act (RA 3765) gives you the right to sue for non-disclosure.
- Report harassment to the SEC’s Enforcement and Investor Protection Dept. (eipd@sec.gov.ph) or via the e-FAST public complaint portal.
For payment gateways & e-wallets Under BSP AMLA guidelines and RA 11945, you may be held jointly liable for facilitating collections by an unlicensed lender. Require a copy of the CA and match the corporate name to the settlement account.
11 | Frequently-asked questions
| Question | Short answer |
|---|---|
| Can a sole proprietor register as a lending company? | No. Only stock corporations may obtain a CA under RA 9474. |
| Is a micro-lending cooperative covered? | No, cooperatives are regulated by the CDA, not the SEC. |
| May a lending company accept deposits? | Absolutely not; that is an unsafe banking activity and grounds for criminal prosecution under the General Banking Law. |
| Do interest-rate caps apply to pawnshops or salary-deduction loans? | Pawnshops follow BSP rules, not SEC MC 3-2022. Salary loans by employers are separately governed by Labor advisories. |
| Is peer-to-peer (P2P) lending legal? | A P2P platform must still be operated by a licensed LC/FC or a registered crowdfunding intermediary under SEC rules. |
12 | Key legal references (chronological)
- RA 9474 – 22 May 2007
- SEC IRR of RA 9474 – 15 June 2008, latest amendments 2021
- SEC MC 6-2009 – Fit-and-Proper Rules
- SEC MC 18-2019 – Prohibited Debt-Collection Practices
- SEC MC 19-2019 – Registration and Reporting of Online Lending Platforms
- RA 11945 – 6 May 2022, Financial Products & Services Consumer Protection Act
- SEC MC 3-2022 – Interest-Rate & Fee Cap Rules
- NPC Advisory 2022-01 – Data-minimisation in Lending Apps
Conclusion
Verifying a Philippine lending company’s licence hinges on one document—the Certificate of Authority—and a handful of publicly available SEC databases. Because the SEC, NPC, AMLC and the courts now coordinate closely, operating (or dealing with) an unlicensed lender carries material legal and financial risk. Borrowers, investors and service providers who spend five minutes checking those records can avoid years of costly litigation and reputational harm.
Prepared 15 July 2025. This guide is for informational purposes and should not be taken as formal legal advice.