How to Open a Lending Investor in the Philippines

All you need to know on how to open, start and setup a lending investor in the Philippines (Lending Business or Loan Company)

Definition:  Lending Company shall refer to a corporation engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen (19) persons. It shall not be deemed to include banking institutions, investment houses, savings and loan associations, financing companies, pawnshops, insurance companies, cooperatives and other credit institutions already regulated by law. The term shall be synonymous with lending investors.

Form of Organization

A lending company may only be established as a corporation. This excludes a sole proprietorship or a partnership from operating a lending business. No lending company shall conduct business unless granted an authority to operate by the SEC.

Corporate Name Requirement

The corporate name must include the words “Lending Company” or “Lending Investor” or any other word descriptive of its primary activity of granting loans to the public except words commonly used to identify financing companies shall always be included in the corporate and trade name.

Minimum Capital Requirement

The minimum required paid-in capital is One Million Pesos (PHP1,000,000.00) for the head office. Additional capital is required for each branch, extension, satellite office or unit established, the excess of the required minimum paid-up capital may be applied to the additional capital requirement as follows:

PHP300,000.00 : Metro Manila and other first class cities;

PHP150,000.00 : Second class and other cities;

PHP 75,000.00 : Municipalities.

Foreign Ownership of a Lending Investor

100% foreign ownership of a lending investor is allowed. No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos. More than 40% foreign ownership requires a minimum paid-in capital of US$ Two Hundred Thousand (USD200,000.00) .

Size of Loan and Interest

A lending company may give loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor: Provided, That the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”. As of August 19, 2013 there are no usury laws which limit the interest rate a lending investor my charge loan recipients. The Supreme Court has reduced the interest rate, in some cases as being excessive, iniquitous, unconscionable and exorbitant, hence, contrary to morals (“contra bonos mores”), if not against the law.

In accordance with the Truth in Lending Act and prior to the consummation of the transaction, a lending company shall furnish each debtor a disclosure statement, setting forth, to the extent applicable, the following information:

i. The principal amount of loan;
ii. Rate of interest of the loan;
iii. Service or processing fee, if any;
iv. Amortization schedule;
v. Any penalty charge for late amortization payment;

Requirements for Securing an Authority to Operate a Lending Investor from the SEC

i. Information Sheet;

ii. NBI clearance of Filipino directors/officers;

iii. Foreign directors/officers, shall submit a clearance from the Bureau of Immigration (BI), a photocopy of his passport showing a valid visa or stay in the Philippines, ACR i-card, and a work permit issued by the Department of Labor and Employment;

iv. President’s Sworn Statement and Undertaking that the corporation will not accept or solicit investments, other than loans, from more than 19 persons without SEC approval, and upon presentation of valid claims, it shall immediately indemnify or return the investments of persons from said unauthorized public solicitation of funds; Moreover, the sworn statement shall likewise contain an undertaking that the country or state of the foreign applicant allows Filipino citizens and corporations to do lending business therein.

v. Business plan including method of marketing its product and sources of the funds and maturities of credit; and

vi.Statement of its compliance with Rule 17.1(2)(A)(i) and (ii) of the Amended Implementing Rules and Regulations of the Securities Regulation Code.

Branches, Extension or Satellites Offices or Units

i. Loan transactions shall be booked in the authorized offices of the lending company;

ii. No lending company shall establish or operate a branch, extension office or unit or satellite office without prior approval by the SEC. The following documents shall be submitted for the opening of a branch office:

1) Information Sheet on the proposed branch;

2) NBI clearance of the manager, cashier and administrative officer of the proposed branch;

iii. The Certificate of Authority to operate a branch, extension office, unit or satellite office shall be coterminous with that of the Head Office.

SEC Licensing Fees (for secondary license):

i.Initial Application Fees shall be paid to SEC at the time of filing of application.

1) Head Office –

A fee of 1/10 of 1% of the paid-up capital of the lending company shall be paid for the issuance of a Certificate of Authority to Operate as a Lending Company.

2) Branch, extension office, unit or satellite office

A fee of 1/10 of 1% of the assigned capital of the branch, extension office, unit or satellite office shall likewise be paid for the issuance of an original Certificate of Authority.

ii. Annual fee –

An annual fee shall be paid not later than forty five (45) days before the anniversary date of the CA.

1) Head Office – 1/8 of 1% of the required paid-up capital

2) Branch Office – 1/8 of 1% of the required paid-up capital

Commencement of Operations

A corporation/company that has been duly registered and granted a Certificate of Authority to Operate as a Lending Company shall commence operations within one hundred twenty (120) days from date of grant of such authority. Failure to commence operations within said period shall be a ground for the suspension of its CA.

Usage of Funds

Lending Companies shall use at least 51% of their funds for direct lending purposes.

The total investment of a lending company in real estate and in shares of stock in a real estate development corporation and other real estate based projects shall not at any time exceed twenty-five (25%) percent of its net worth.

Maintenance of Books of Accounts and Records

(a) Every lending company shall maintain books of accounts and records as may be required by the SEC and prescribed by the Bureau of Internal Revenue and other government agencies. In case a lending company engages in other businesses, it shall maintain separate books of accounts for these businesses.

(b) The Manual of Accounts prescribed by the BSP for lending investors shall continue to be adopted by lending companies for uniform recording and reporting of their operations, until a new Manual of Accounts shall have been prescribed by the SEC.

Reportorial Requirements

General Information Sheet (GIS) – Within thirty (30) days from annual meeting, as stated in its SEC approved bylaws

Audited Financial Statements prepared by an external auditor accredited by the SEC – Within One Hundred Twenty (120) days from end of fiscal year, as stated in its SEC approved bylaws

Special Forms for Financial Statements in Electronic Format – Within thirty (30) days from the last day of submission of the annual Audited Financial Statements

Interim semi-annual financial statements (using Special Form) including the following:
• Balance Sheet;
• Income and Expense statement;
• Cash flow
• Statement of Changes in Equity
• Schedule of Liabilities
• List of Directors and Officers
• Aging of Receivables

– Within forty-five (45) calendar days from the end of the interim semi-annual period covered by the report.

Manual on Anti-Money Laundering
• If foreign participation in voting stocks is more than 40%; or
• If total assets is PHP10M or more


Republic Act No. 9474Lending Company Regulation Act of 2007”
Republic Act No. 10881 “An Act Amending Investment Restrictions In Specific Laws Governing Adjustment Companies, Lending Companies, Financing Companies And Investment Houses Cited In The Foreign Investment Negative List And For Other Purposes.”
SEC Reduced Requirements for Financing and Lending Companies

Implementing Rules and Regulations of Lending Company Regulation Act of 2007 (Republic Act of 2007)

SEC Memo No. 3, Series of 2013