Last reviewed: 27 September 2026
Consumer and SME credit is a growing market in the Philippines, and the law now allows foreign investors to own financing companies outright. It is also one of the most closely supervised non-bank sectors, and the SEC tightened its rules in 2026. This guide covers what you need to know before you start financing company registration in the Philippines.
What counts as a financing company
Under the Financing Company Act of 1998 (Republic Act No. 8556), a financing company is a corporation that extends credit to consumers and to industrial, commercial or agricultural enterprises. It can do this through:
- direct lending;
- discounting or factoring commercial papers or accounts receivable;
- buying and selling contracts, leases, chattel mortgages or other evidences of indebtedness; or
- financial leasing of movable and immovable property.
A financing company may engage in quasi-banking and money market operations only with prior approval from the Bangko Sentral ng Pilipinas (BSP). The SEC administers and enforces the law. The law also prohibits operating as a financing company, or using a name that suggests one, without SEC authority.
Financing company or lending company?
A lending company under the Lending Company Regulation Act of 2007 (RA 9474) is a corporation that grants loans from its own capital or from funds sourced from not more than 19 persons. It is essentially a pure money lender.
A financing company has a wider menu, which also covers leasing, factoring, discounting and receivables financing. The capital requirements differ as well, as explained below. If your business model involves equipment or vehicle leasing, or buying receivables, you will likely need a financing company licence rather than a lending company licence.
Foreign ownership: up to 100%
The original Financing Company Act required financing companies to be at least 40% Filipino-owned. RA 10881 (2016) removed that restriction. Under Section 6 of RA 10881, financing companies may be up to 100% foreign-owned. RA 10881 also allows up to 100% foreign ownership of lending companies, subject to the constitutional and legal limits on owning land. The same law preserves the powers of the BSP over entities under its supervision.
Foreign investors should still consider the general rules of the Foreign Investments Act. These include the capital-remittance documents needed if you want to register the investment with the BSP and later repatriate capital or profits in foreign currency.
Minimum paid-up capital
What the statute says
As amended by RA 10881, the Financing Company Act sets the minimum paid-up capital according to where the principal office is located:
| Location of principal office | Statutory minimum paid-up capital |
|---|---|
| Metro Manila and other first-class cities | ₱10,000,000 |
| Other classes of cities | ₱5,000,000 |
| Municipalities | ₱2,500,000 |
The law expressly allows the SEC to adjust these levels.
What the SEC now requires
The SEC has used that power. Under SEC Memorandum Circular No. 20, series of 2026, issued in July 2026:
- New financing companies must have a minimum paid-up capital of ₱15 million. New lending companies must have ₱5 million.
- Financing companies running online lending platforms must maintain more capital. The requirement starts at ₱20 million for one platform and rises in steps to ₱100 million for five platforms, which is the maximum. The corresponding range for lending companies is ₱10 million to ₱50 million.
- What counts as paid-up capital: retained earnings, additional paid-in capital, advances and similar items are excluded.
- Existing companies were given 12 months to meet the new capital levels.
In practice, the SEC’s current figure, not the older statutory table, is the number to plan around. Wire your capital through the banking system and keep the bank certificates, because the SEC will require proof of paid-up capital.
The Certificate of Authority
Incorporation with the SEC is not enough to operate. A financing company needs a Certificate of Authority (CA) from the SEC before it can engage in financing. The usual path is:
- Incorporate a corporation whose primary purpose is financing, with a compliant corporate name and the required paid-up capital.
- Apply for the Certificate of Authority, submitting the SEC’s documentary requirements, such as proof of capital, business plan and officer information.
- Register with the local government and the BIR: barangay clearance, mayor’s permit, and BIR registration for each principal office and, where required, each branch.
- Register any branches and online platforms with the SEC before using them.
MC 20 (s. 2026) adopts a single Certificate of Authority policy covering all of a company’s authorised activities. It also brings in an annual licensing fee based on total assets, which takes effect from 2027. Check the current fee schedule with the SEC.
If foreign officers will be based in the Philippines, plan for their Alien Employment Permit and 9(g) visa early.
Online lending and interest-rate caps
Online lending platforms
After a moratorium on new online lending platforms, MC 20 (s. 2026) reopened registration effective August 1, 2026, under stricter conditions:
- Platform disclosure: platforms must be disclosed to and registered with the SEC. Existing operators were given 180 days to disclose them.
- Borrower protections: borrower disclosure and confirmation rules apply, and people in a borrower’s phone contacts cannot be treated as guarantors.
- Debt collection: the SEC’s rules against unfair debt collection practices (SEC MC No. 18, s. 2019) continue to apply.
Interest and fee ceilings on small loans
For many years, small consumer loans were covered by a ceiling of 15% per month under BSP Circular No. 1133 (2021) and SEC MC No. 3 (s. 2022). The SEC has since recalibrated these ceilings under SEC MC No. 14, s. 2025 (issued December 10, 2025), for loans granted, renewed or restructured from April 1, 2026. For unsecured, general-purpose consumer loans of ₱10,000 or less with terms of up to four months, the caps are:
- Nominal interest rate: 6% per month.
- Effective interest rate: 12% per month. This includes the nominal rate plus processing, service and similar fees, but excludes late-payment penalties.
- Late-payment or non-payment penalties: 5% per month on the outstanding scheduled amount due.
- Total cost of the loan: 100% of the amount borrowed, covering all interest, fees and penalties, however long the loan is outstanding.
Schemes to get around the caps, such as splitting loans or recharacterising fees, are violations. If your product falls in this segment, build the caps into your pricing and loan documents from day one.
Reportorial and compliance requirements
The SEC’s published guidance for financing and lending companies lists recurring obligations. These include:
- General Information Sheet (GIS): within 30 days of the annual stockholders’ meeting.
- Audited financial statements: generally by April 15 for calendar-year companies, or within 120 days of fiscal year-end.
- Special SEC forms and interim reports: the SEC’s special financial statement form for financing companies, plus interim financial information filed semi-annually (within 45 days after each semester).
- AML compliance: an anti-money laundering and counter-terrorism financing program with related compliance filings.
- Governance: a Manual on Corporate Governance and a compliance officer certification.
- Collection practices: sworn certification of compliance with the rules on unfair collection practices.
- Online platforms: disclosures and affidavits for any online lending platforms.
- Annual SEC fees.
Missing these filings can lead to penalties, suspension or revocation of the Certificate of Authority. A compliance calendar is essential.
Frequently asked questions
Can a foreigner own 100% of a Philippine financing company? Yes. RA 10881 allows up to 100% foreign ownership, subject to the SEC’s capital and licensing requirements.
What is the minimum capital for a new financing company in 2026? The statute sets ₱10M, ₱5M or ₱2.5M by location, but SEC MC 20 (s. 2026) now requires ₱15 million paid-up for new financing companies, with more for companies running online platforms.
Do I need a Certificate of Authority if I only do leasing? Financial leasing falls within the Financing Company Act’s definition, so you should expect to need SEC authority. Have your business model reviewed.
Do the interest caps apply to all loans? No. The SEC ceilings target small, short-term, unsecured consumer loans. Other loans remain subject to general law and the SEC’s disclosure and fair-collection rules.
Plan your licence properly
Our legal team helps foreign and local investors structure, incorporate and license financing and lending companies. See our company formation service or contact us. The consultation is free, and fees are quoted per client.
Book a free consultation · WhatsApp/Viber +63 946 341 4836 · info@bizzurevisa.com
Sources
- RA 8556, Financing Company Act of 1998: https://lawphil.net/statutes/repacts/ra1998/ra_8556_1998.html
- RA 10881 (2016): https://lawphil.net/statutes/repacts/ra2016/ra_10881_2016.html
- RA 9474, Lending Company Regulation Act of 2007: https://lawphil.net/statutes/repacts/ra2007/ra_9474_2007.html
- DivinaLaw summary of SEC MC No. 20, s. 2026: https://www.divinalaw.com/wp-content/uploads/2026/09/SEC-01-SEC-Memorandum-Circular-No.-20-Series-of-2026.pdf
- ACCRALAW, “A Controlled Reopening of the Online Lending Industry”: https://accralaw.com/2026/08/19/a-controlled-reopening-of-the-online-lending-industry/
- BusinessWorld, “SEC lifts ban on new online lending apps” (July 8, 2026): https://bworldonline.com/editors-picks/2026/07/08/761817/sec-lifts-ban-on-new-online-lending-apps/
- BusinessWorld, “SEC sets limits on interest, fees for small consumer loans” (December 12, 2025): https://bworldonline.com/corporate/2025/12/12/718325/sec-sets-limits-on-interest-fees-for-small-consumer-loans/
- eLegal, SEC recalibrates interest-rate ceilings: https://elegal.ph/sec-recalibrates-ceilings-of-interest-rates-and-other-fees-charged-by-financing-and-lending-companies/
- BSP Circular No. 1133 (2021): https://www.bsp.gov.ph/Regulations/Issuances/2021/1133.pdf
- SEC, Lending and Financing Companies FAQ: https://www.sec.gov.ph/lending-companies-and-financing-companies-2/frequently-asked-questions/
This article is general information, not legal advice. Requirements and fees are set by government agencies and may change without notice.
