SEC Registration Check for Lending Companies in the Philippines

Why this matters

Lending scams and abusive collection practices remain common in the Philippines. Verifying a lender’s legal authority to operate is your first line of defense. In the Philippines, the Securities and Exchange Commission (SEC) is the primary regulator of lending companies and financing companies (distinct from banks, which are regulated by the Bangko Sentral ng Pilipinas (BSP)).

The legal framework at a glance

Primary laws
- Lending Company Regulation Act of 2007 (LCRA, R.A. 9474) and its IRR — establishes who may operate a lending company and the SEC’s licensing powers.
- Financing Company Act (R.A. 8556) — governs financing companies (a related but different category).
- Revised Corporation Code (R.A. 11232) — corporate formation and governance requirements.
- Anti-Money Laundering Act (R.A. 9160, as amended) — lending/financing companies are covered persons for AML/CFT.
- Data Privacy Act (R.A. 10173) — governs how lenders collect, store, and use borrowers’ personal data.
Key regulators
- SEC — incorporation, secondary licensing (Certificates of Authority), market conduct, and enforcement.
- BSP/Monetary Board — sets price caps for certain small, short-term loans; works with the SEC on implementation.
- National Privacy Commission (NPC) — privacy compliance and penalties for invasive/abusive data handling.
- NTC/DICT and law enforcement — site/app blocking and cybercrime enforcement, when needed.

What counts as a “lending company”?

A lending company is a Philippine corporation that grants loans from its own capital (not by deposit-taking) as its primary purpose. It must be incorporated with the SEC and hold an SEC Certificate of Authority (CA) to operate as a lending company.

Sole proprietorships and partnerships may lend (as private transactions), but they cannot hold themselves out to the public as lending companies under the LCRA unless they are SEC-registered corporations with a CA.

Financing companies are similar but usually larger in scope (e.g., installment financing, leasing) and are licensed under a different statute (R.A. 8556) with different capital and disclosure requirements. Many compliance concepts overlap, but don’t assume a financing company license equals a lending company license—check the exact authorization.

Core licensing: two layers you must see

Primary registration (corporate status)
- SEC Certificate of Incorporation (or proof of conversion) that matches the entity’s exact legal name.
- Articles of Incorporation must state a primary purpose consistent with engaging in lending.
Secondary license: Certificate of Authority (CA) to Operate
- Issued by the SEC under the LCRA.
- Must be current and publicly displayed at the principal place of business and branches.
- Shows the company name, principal office, date of issuance, and authority number.
- No CA = no lawful public lending business, even if incorporated.

Minimum capital. The LCRA and its rules require minimum paid-in capital (commonly understood as ₱1,000,000 for lending companies at the time the IRR took effect). The SEC can impose higher thresholds or other prudential requirements, especially for multiple branches or digital operations.

Special case: online lenders & lending apps

If a lender operates via a website or mobile app, additional SEC rules apply. In practice this means:

The corporation must have an SEC CA as a lending or financing company and
The specific online lending platform (OLP) or app must be registered/cleared with the SEC before launch.
Each app must identify the licensed entity behind it; app store listings and websites should display the corporate name and CA details.
Unfair debt collection (harassment, doxxing, contacting a borrower’s phone contacts, threats, profanity, shaming) is prohibited. The SEC has repeatedly penalized and ordered takedowns of non-compliant apps.

How to verify a lender (practical checklist)

Match the name exactly
- Obtain the exact corporate name (not just a brand). Trade names/DBAs must still tie back to a licensed corporation.
Ask for the SEC documents
- SEC Certificate of Incorporation (or digital equivalent).
- SEC Certificate of Authority to Operate as a Lending Company (or as a Financing Company, if applicable).
- Check: names, addresses, and dates on the CA vs. what’s displayed online, on receipts, and in contracts.
Check the place of business
- The CA should be posted at the principal office and any branch.
- Verify the physical address and contact channels on official materials.
For apps and websites
- Confirm the app/website plainly names the licensed entity (the same entity on the CA).
- Beware of copycat names (minor spelling differences) or apps that list no company at all.
Scrutinize the loan agreement
- It should identify the licensed lender, total amount financed, interest rate, fees, repayment schedule, penalties, and privacy policy.
- No blank spaces, no hidden fees; effective cost should be fully disclosed.
Pricing caps for small, short-term loans
- For certain small loans (e.g., not more than ₱10,000, usually ≤ 4 months tenor), a monthly interest cap and fee cap apply (widely cited figures include 6%/month interest and 5%/month for certain fees, plus a 1%/month cap on penalties for late payment).
- Check if your loan falls under these caps; if yes, the lender must comply.
Privacy & collections
- The lender must follow the Data Privacy Act: limit permissions, no harvesting of contacts/photos unrelated to creditworthiness, clear consent, secure storage.
- Collection conduct must be lawful and respectful—no threats, no public shaming, no third-party disclosure of debts without legal basis.
AML/KYC
- Expect valid ID checks, basic KYC, and transaction monitoring. Refusal to perform KYC is a red flag.

Red flags (likely illegal or abusive)

No SEC CA (only a DTI certificate or mayor’s permit presented).
Mismatch of names between app/website and the presented CA.
Unreasonable or undisclosed charges, daily compounding without disclosure, or pricing above regulatory caps for covered small loans.
Accessing your phone contacts/files without clear need and consent.
Harassing collection tactics: threats of arrest, contacting your employer or relatives, defamatory posts.
“Deposit first to unlock loan” schemes. Legitimate lenders do not require advance payment to release loans.

Consequences for non-compliant lenders

SEC administrative sanctions: suspension or revocation of CA, fines, and cease-and-desist orders (including app takedowns and website blocking in coordination with other agencies).
Criminal liability under the LCRA and related laws (officers and responsible persons can be held liable).
Data privacy penalties from the NPC for unlawful data processing.
Consumer protection actions under special laws (e.g., for unfair trade practices).

Distinguishing lending vs financing companies (quick guide)

Feature	Lending Company	Financing Company
Governing law	R.A. 9474	R.A. 8556
Main activity	Loans from own capital	Installment financing, factoring, leasing; broader credit
License	SEC CA (Lending)	SEC CA (Financing)
Capitalization	Generally lower (e.g., ₱1M baseline)	Generally higher
App/online ops	Must comply with SEC OLP rules	Must comply with SEC OLP rules

A company licensed only as a financing company is not automatically licensed as a lending company (and vice-versa). The license must match the actual activity held out to the public.

For borrowers: how to protect yourself

Get copies of the CA and corporate documents.
Keep all communications (screenshots of app pages, texts, emails, call logs).
Compute the effective cost (interest + fees + taxes + penalties).
Pay through traceable channels; keep receipts.
If harassed, keep evidence (screenshots/recordings where lawful).

Where to complain/report

SEC Enforcement and Investor Protection for unlicensed lending, abusive practices, and violations of SEC circulars.
NPC for privacy violations.
NBI/PNP Anti-Cybercrime for online harassment, threats, and doxxing.
Local government for business permit violations.
BSP/Consumer Assistance if issues touch on rate caps or broader consumer credit concerns.

For lenders: compliance essentials (setup & ongoing)

Formation & licensing
- Incorporate under the Revised Corporation Code with a primary purpose of lending.
- Maintain minimum paid-in capital and apply for the SEC CA.
- Register each online lending platform before launch; keep disclosures updated.
Governance & risk
- Adopt policies on credit, collections, AML/CFT, data privacy, outsourcing, and complaints handling.
- Appoint compliance officers for AML and data privacy; register with the AMLC system as a covered person.
- Maintain board-approved pricing and fee schedules aligned with caps (where applicable).
Customer-facing
- Clear KYC and suitability checks; fair, non-discriminatory standards.
- Full cost disclosure; no hidden charges; no forced add-ons.
- Fair collection protocols; prohibit harassment; keep call recordings/audit trails.
Tech & data
- Data minimization: mobile permissions limited to what’s necessary.
- Secure development practices; third-party vendors under DPAs and outsourcing controls.
- Breach response plan and NPC notification procedures.
Regulatory reporting
- Timely general information sheets (GIS) and SEC filings.
- AMLC reporting (CTR/STR) and compliance testing.
- Cooperate with SEC inspections and respond to show-cause orders.

Frequently asked questions

Is a mayor’s permit enough? No. Local permits are not a substitute for an SEC Certificate of Authority.

Do interest rate caps apply to all loans? No. Caps issued by the Monetary Board apply to specific small, short-term loans. Longer or larger loans may not be capped the same way, but lenders still must disclose costs and avoid unconscionable terms.

Can a foreign company lend here? Yes, but doing business in the Philippines triggers SEC licensing and possibly foreign ownership limits for certain activities. Cross-border online lending aimed at Philippine residents also raises licensing and consumer protection issues.

Do I need a separate license for each branch or app? Branches must be recorded with the SEC. Each app/OLP must undergo SEC processes before public release and must clearly identify the licensed entity.

Model clauses & borrower tips

Disclosure clause: “Total cost of credit, including interest, fees, taxes, and penalties, is ₱____, equivalent to ____% APR, assuming on-time payments. No prepayment penalty.”
Privacy notice anchor: “We collect only data necessary for credit evaluation and servicing. We do not access contacts, photos, or files unrelated to your loan. We do not disclose your debt to third parties except as required by law.”
Collection conduct pledge: “No threats, profanity, or public shaming. Communications limited to borrower and authorized contacts between 8:00 AM and 9:00 PM.”

Bottom line

To legally operate as a lending company in the Philippines, a firm must be (1) a Philippine corporation, and (2) hold a current SEC Certificate of Authority that matches its public-facing name, address, and operations—including each app or website it uses. A quick, disciplined verification of these elements—plus pricing, privacy, and collection practices—will tell you whether you are dealing with a lawful lender or a risky operator.