Name
Global FinTech Guide
Country _ Name
Philippines
SectionTitle
Loan services/factoring/loan broking/finetrading
Body
FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time. 

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

During the height of lockdowns caused by the COVID-19 pandemic, the SEC saw an increased reliance on Online Lending Platforms (OLPs), which are mobile lending applications, websites, and other FinTech-enabled programs or systems where the services and products of financing and lending companies are made available. This led the regulator to closely review OLP activities and to address the proliferation of unregistered personal loan apps. On 2 November 2021, the SEC imposed a moratorium on the registration of new OLPs. Pursuant to SEC Memorandum Circular No. 10, series of 2021, only OLPs that were duly registered and recorded with the SEC as of 2 November 2021 are allowed to engage in online lending.

In April 2022, Google stated that, beginning 11 May 2022, it will require OLPs targeting Philippine users to prove registration with the SEC and submit declarations of compliance with laws before they can publish their apps on the Google Play Store. While the regulators are generally open to FinTech solutions, there appears to be greater regulation for FinTech-enabled lending and financing activities. In 2024 up to the first half of 2025, the SEC issued cease and desist orders to unregistered OLPs.

In response to the broader challenges posed by digital finance innovations, the SEC has also implemented the SEC StratBox, a regulatory sandbox regime that allows firms to test innovative products or services in a live but controlled setting, with the goal of eventually offering them to the public at large. Participation in the sandbox may entail exemptions from certain legal or regulatory requirements, as the SEC is authorized to grant waivers or modifications within its legal capacity. These are determined on a case-by-case basis, depending on factors such as the level of risk associated with the activity, the strength of the participant’s security and compliance measures, the degree to which the initiative supports the SEC’s regulatory mandate or ongoing projects, and the overall benefits the innovation may bring to the public and the nation. Based on the nature of the financial product or service being tested, the scope of the experiment, and the qualifications of the applicant, the SEC will assess which specific legal and regulatory requirements it may be inclined to waive or adjust.
If an OLP were to qualify for the SEC StratBox, it could, in principle, be allowed to operate notwithstanding the existing moratorium on the registration of new online lending platforms under SEC Memorandum Circular No. 10, Series of 2021. However, we are not currently aware of any OLP that has been admitted into the sandbox. At this stage, it remains uncertain whether OLPs would qualify, especially given that the SEC has yet to provide concrete guidelines or a framework for evaluating which types of financial innovations are eligible for inclusion in the StratBox.



Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

In addition to the General Banking Law (Republic Act No. 8791), other laws on banking, and the regulations promulgated and implemented by the BSP in connection with loan giving, factoring, and ancillary services rendered by financial institutions under its jurisdiction, the SEC also implements the Financing Company Act (Republic Act No. 8556, as amended) and Lending Company Regulation Act (Republic Act No. 9474, as amended) which are intended to regulate the activities of financing companies and lending companies. Under both laws, an entity intending to engage either as a financing company or a lending company needs to obtain a certificate of authority from the SEC.

Financing companies are required to be organised in the form of stock corporations, may be owned up to 100% by foreign nationals, and should have a paid-up capital of not less than PhP10 million (approx. US$191,828) in case the financing company is located in Metro Manila and other first-class cities, PhP5 million (approx. US$95,914) in other classes of cities and PhP2.5 million (approx. US$47,957) in municipalities. In addition to the foregoing, a financing company is required to put up minimum additional capital for each branch, agency, extension office or unit in the amount of PhP1 million (approx. US$19,183) if it will be located in Metro Manila and other first-class cities, PhP500,000 (approx. US$9,591) in other classes of cities, and PhP250,000 (approx. US$4,796) in municipalities.

On the other hand, a lending company is required to have a minimum paid up capital of PhP1 million (approx. US$19,183) unless the SEC prescribes a higher minimum capitalisation, if warranted by the circumstances. Should a branch, extension, satellite office or unit be established, the excess of the required minimum paid-up capital may be applied to the additional capital requirement for the proposed branch, extension, satellite office or unit, as follows: PhP300,000 (approx. US$5,755) for Metro Manila and other first-class cities, PhP150,000 (approx. US$2,877) for second class and other cities, and PhP75,000 (approx. US$1,439) for municipalities.
Note, however, that foreign entities seeking to establish a financing or lending company in the Philippines must comply with the higher capital requirement prescribed under either the Financing Company Act, the Lending Company Regulation Act, or the Foreign Investments Act. Under the FIA, a foreign-owned domestic market enterprise must have a minimum paid-up capital requirement of US$200,000 (approx. PhP11.4 million), unless it qualifies for an exemption. Therefore, the applicable capital requirement for such financing or lending company will be the highest among those set by the aforementioned laws.

A broker dealer (or an entity that buys or sells securities for its own and customers' account) should register with the SEC as such, and for that purpose, should meeting the following requirements, among other things: (i) compliance with SEC risk based capital adequacy requirement/ratio for brokers, (ii) unimpaired capital of PhP100 million (approx. US$1,918,282) for broker dealers who will be participating in a registered clearing agency, or those acquiring the business of an existing broker dealer but will be participating in a registered clearing agency, (iii) PhP30 million (approx. US$575,485) unimpaired paid up capital or such other amount as the SEC may prescribe, for existing broker dealer applicants not meeting the PhP100 million (approx. US$1,918,282) capitalisation and not seeking authorisation to engage in market making transactions, and (iv) PhP2.5 million (approx. US$47,957) unimpaired paid up capital or such other amount as the SEC may prescribe, for applicants dealing purely in proprietary shares who are not holding securities for their clients.

Obtaining a certificate of incorporation and a certificate of authority to operate as a financing company, a lending company or a brokerage firm requires compliance with various documentary requirements of the SEC and payment of the applicable filing fees. In addition to these certificates, the financing company also needs to obtain certain other registrations, permits and licenses.

Persons or entities intending to provide services in the Philippines would generally be considered doing business in this jurisdiction and therefore, must also register and obtain a primary license from the SEC. This entails submission of documentary requirements with the SEC depending on the corporate vehicle (subsidiary or branch) intended to be established.



Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area

N/A



Economic conditions

Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area

As of 2 November 2021 (when the moratorium on new OLPs took place), the SEC recorded 140 registered OLPs. Based on the SEC’s list of financing companies as of 30 September 2023, there are approximately 900 registered financing companies. Meanwhile, the Credit Information Corporation lists 318 financing and lending companies as of May 2025.

Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area

In November 2021, the SEC issued a circular imposing a moratorium on the registration of new OLPs, including existing financing companies and lending companies that will engage in OLP. The moratorium is in effect until it is formally lifted by the SEC.

In March 2022, the SEC confirmed that the moratorium continues to be in effect until further announcement. No further updates from the SEC have been released as of 31 July 2025.  

Authors

Close

Choose country