In the Philippines, many individuals and small businesses struggle to access credit through traditional banks due to strict requirements, high collateral demands, and long approval processes.
As a result, they turn to unreliable "5-6" lenders who charge exorbitant interest rates of 5% to 10% per month, often putting personal belongings, such as jewellery, at risk as collateral.
The lack of access to affordable, transparent financing options has made the need for alternative lending solutions more urgent than ever.
In this article, we outline a money lending business plan sample for the Philippines, focusing on the growing demand for flexible, transparent, and affordable credit solutions.
TL;DR
- Starting a money lending business in the Philippines requires SEC registration, forming a stock corporation, and obtaining a Certificate of Authority.
- Legal compliance includes adhering to interest rate caps (maximum 6% per month) and Anti-Money Laundering regulations.
- Develop loan products for underserved SMEs with flexible, transparent terms.
- Possible loan offerings include microfinance, term loans, bridge loans, invoice factoring, and working capital loans, tailored to diverse business needs.
Comprehensive Guide to Establishing a Successful Money Lending Business in the Philippines
Starting a money lending business in the Philippines offers a great opportunity to meet the growing demand for accessible credit. With many Filipinos underserved by traditional banks, the need for alternative lending is increasing.
For those looking to dive deeper into this process, a money lending business plan sample PDF offers a clear structure for setting up and operating a successful business, covering legal compliance, market strategies, loan offerings, and financial projections.
To begin, understanding the current lending environment and the demand for accessible credit solutions is crucial.
1. Executive Summary
With the Philippine economy projected to grow 6.0% in 2025 and digital transformation reshaping the lending sector, demand for flexible financing is increasing.
Consumer loans in the Philippines reached ₱1.67 trillion in April 2025, representing a 24% year-over-year increase. Meanwhile, the digital lending market is expected to surpass USD 1 billion by the second half of 2025.
By offering digital platforms and tailored loan products, businesses can address both short-term cash flow challenges and long-term funding needs for growth.
Key Objectives:
- Provide flexible loan services to underserved individuals and businesses.
- Achieve profitability within 2-3 years by expanding digital lending platforms.
- Ensure compliance with SEC, BSP, and AMLC regulations to foster trust.
2. Business Structure & Legal Compliance
To legally operate as a money lender in the Philippines, the business must adhere to strict regulations set by the Securities and Exchange Commission (SEC).
Legal Requirements:
- Register with the SEC: Register under the Lending Company Regulation Act (RA No. 9474).
- Form a Stock Corporation: Sole proprietorships and partnerships are prohibited.
- Obtain a Certificate of Authority: Essential to operate legally as a money lender.
- Interest Rate Caps: Maximum 6% per month, with any excessive charges deemed illegal.
- Regulatory Compliance: Adherence to regulations set by the Bangko Sentral ng Pilipinas (BSP) and other governing bodies is essential for sustainable growth.
- Anti-Money Laundering Act (AMLA) Compliance: Adhere to Know Your Customer (KYC) rules and report suspicious transactions to the Anti-Money Laundering Council (AMLC).
To ensure your business is on the right track, a money lending business plan sample PDF can serve as a great reference for outlining your legal compliance and business structure requirements.
3. Target Market
The target market for a money lending business in the Philippines is diverse, as many groups continue to struggle with accessing traditional financing options :
- Low-income individuals: Many Filipinos, especially in rural areas, lack access to traditional financial services and require quick loans for emergencies, education, or personal needs.
- Micro-entrepreneurs and small business owners: Small businesses with limited capital face challenges in securing bank loans and often need funding for working capital, equipment, or expansion.
- Tech-savvy consumers: Younger, digitally native individuals prefer online lenders for fast loan applications and disbursements, aligning with digital lending platforms.
- Freelancers and gig economy workers: Freelancers with income instability need short-term loans for project gaps, valuing flexible repayment terms and quick access to funds.
- Rural communities: Many areas still lack formal financial institutions, making micro-lending and community-based services essential for agricultural, educational, or business-related expenses.
Key Needs:
- Quick loan approval with minimal paperwork.
- Access to affordable, transparent loan products.
- Flexibility in repayment schedules, especially for small businesses and freelancers.
- Easy-to-use digital platforms for efficient loan processing.
To address these needs, it’s important to develop a variety of loan products that provide flexible and transparent financing options.
4. Loan Offerings
A diverse range of loan products will help cater to the unique needs of different market segments.
These loan offerings should be designed to address the financial challenges faced by various groups, ensuring accessibility and flexibility.
Interest Rates and Repayment Terms:
- Microfinance loans: Higher interest rates (typically 6% per month), short repayment terms.
- Term loans: Competitive interest rates based on the borrower’s financial standing.
- Government-backed loans: Special low-interest rates and 0% interest for the first year.
- Bridge loans and invoice factoring: Quick approval and flexible terms with moderate interest rates, especially when compared to traditional bank loans.
Government-backed loans, such as those from SB Corp, offer lower interest rates and may include training or mentoring programs, benefiting SMEs.
Additionally, online lending platforms like n90 stand out with a relationship-based approach, focusing on trust and transparency with clear terms and no hidden fees. Through financial coaching, n90 supports new borrowers, guiding them through the lending process.
5. Marketing Strategy
Marketing your money lending business in the Philippines requires a strategic approach to target both tech-savvy and traditional customers.
Customer Acquisition Channels:
Digital Marketing:
- Use Facebook and Instagram ads, as these platforms are popular in the Philippines.
- Optimise your website and app for SEO to increase organic traffic.
- Produce financial literacy content on platforms like YouTube to build credibility.
Referral Programs: Offer incentives like reduced interest rates or cashback for customers who refer new clients to the business.
- Local Partnerships and Community Engagement: Collaborate with local businesses, co-working spaces, and trade associations to build trust and increase visibility within local communities.
- Mobile App Integration: Creating an easy-to-use app will enhance the customer experience, streamline loan applications, and increase retention.
Next, a structured operational plan will ensure your business runs efficiently, from loan application to repayment processing.
6. Operational Plan
Running a successful money lending business in the Philippines requires an organised operational plan to ensure efficient and compliant daily activities. Below are the essential components for smooth operations:
Loan Application and Evaluation Process
- Application Channels: Offer both online and in-person applications, with mobile-friendly digital platforms for ease of access.
- Documentation: Collect required documents such as IDs, proof of income, and business registration. Larger loans may require financial statements and collateral appraisals.
- Credit Assessment: Use both traditional credit scoring and alternative data to evaluate borrowers with no formal credit histories.
- Approval Workflow: Automate approval processes, ensuring quick turnaround (24-48 hours) with clear approval criteria.
- Risk Mitigation: Implement risk-based pricing and thorough checks, including collateral verification, to manage defaults effectively.
Disbursement Process
- Method: Disburse funds via bank transfers, e-wallets, or cash, depending on the customer’s preference.
- Repayment Structure: Offer flexible repayment options, such as monthly or lump-sum payments, with automated reminders for due dates.
- Payment Collection: Use in-person agents for collections or implement online payment systems for convenience.
Customer Service and Support
- 24/7 Support: Provide multiple customer service channels, including phone, email, and chat, and offer financial coaching for first-time borrowers.
- Loan Renewal/Restructuring: Offer loan renewal or restructuring options and establish guidelines for renegotiating terms if needed.
Technology and Digital Integration
- Loan Management Software: Invest in automated systems for loan origination, disbursement, and repayment tracking.
- Mobile App: Develop a user-friendly mobile app for loan applications, payment tracking, and due date notifications.
- Data Analytics: Utilise analytics to track customer behaviour and repayment trends for better decision-making.
Staffing and Training
- Hiring and Training: Hire skilled staff in finance, customer service, and risk management, providing continuous training to keep them updated.
- Performance Metrics: Set performance metrics, such as loan approval speed and customer satisfaction, to ensure operational efficiency
7. Financial Plan & Projections
A well-defined financial plan ensures the business remains profitable and compliant. The plan should outline:
Revenue Model:
Primarily through loan interest and fees. Offering competitive yet transparent interest rates can attract more customers, particularly SMEs seeking better terms than those provided by traditional banks.
Capital Requirements:
- Initial investment: Minimum PHP 1,000,000 paid-up capital for SEC registration.
- Funding sources: Personal savings, equity investments, and loans.
Profitability Projections:
- Target profitability within 2-3 years, supported by growing loan portfolios and expanding digital services.
- Revenue from interest income is expected to increase as the customer base expands and loan repayments are made on time.
For a comprehensive guide, refer to a money lending business plan sample PDF for a roadmap on structuring your financial outlook.
8. Risk Management
Managing financial and operational risks is essential to maintaining a sustainable business. Key risks include:
- Credit Risk: Mitigated by thorough credit assessments, use of credit scoring models, and collateral requirements where necessary.
- Regulatory Risk: Conduct continuous compliance audits and monitor changes in laws to stay up-to-date with SEC, BSP, and AMLC guidelines.
- Operational Risk: Implement automated systems for loan origination and repayment tracking to reduce human error and improve operational efficiency.
How n90 Stands Out in the Money Lending Business
For many SMEs and in the Philippines, securing credit is a major hurdle. Traditional banks have lengthy approval processes, high collateral demands, and rigid terms. While fintech platforms offer speed, they often lack transparency and charge high fees. Informal lenders impose exorbitant rates, putting businesses at risk.
At n90, we simplify financing by offering flexible and transparent solutions tailored to the needs of SMEs, helping them grow. Here's why SMEs in the Philippines choose n90:
- Tailored Loan Sizes: Loans ranging from ₱1.5M to ₱25M, aligned with your business’s revenue.
- Transparent Terms: Monthly interest rates starting from 1.09%, with no hidden fees or surprise charges.
- Efficient Process: Minimal paperwork, quick approval times, and fast disbursement when you need it most.
- Revenue-Based Lending: Loans based on your business’s revenue rather than just your financial documents.
- Financial Coaching: Personalised guidance throughout the lending process to help make informed decisions.
n90’s Tailored Lending Solutions
n90 offers a range of loan options designed to meet the unique needs of SMEs at different stages of growth:
- Bridge Loans: Short-term funding to cover immediate cash flow gaps or seize new business opportunities.
- Small Business Loans: Flexible funding to support expansion, purchase inventory, or manage day-to-day operational costs.
- Invoice Factoring: Unlock liquidity tied up in unpaid invoices, providing quick access to working capital.
Conclusion
Starting a money lending business in the Philippines involves registering with the SEC, forming a stock corporation, and obtaining a Certificate of Authority. You must comply with interest rate caps and follow Anti-Money Laundering regulations.
After establishing your legal framework, develop loan products tailored to the specific needs of underserved SMEs.
For those seeking a relationship-based approach to business financing, n90 offers personalised support to every client, ensuring a smooth and tailored borrowing experience.
Apply now or call +63 962 663 1393 to speak with an n90 lending expert and learn how we can support your financing needs.
FAQs
Q: What licenses are required to start a money lending business in the Philippines?
A: To operate legally, you need to register with the SEC, form a stock corporation, and obtain a Certificate of Authority. Additionally, your business must comply with interest rate regulations and Anti-Money Laundering requirements.
Q: What types of businesses are eligible for loans from money lenders in the Philippines?
A: Businesses of all sizes are eligible, but loan limits and terms often depend on annual revenue. Small businesses with annual revenues below ₱15 million may qualify for smaller loan amounts, while larger businesses can access more substantial funding.
Q: How do you determine the interest rate for a loan in the Philippines?
A: Interest rates must comply with regulations set by the SEC, with a maximum rate of 6% per month. Lenders often assess the risk and duration of the loan when determining the exact rate, ensuring it remains within legal limits.
Q: How does a money-lending business assess a borrower's creditworthiness?
A: Lenders typically use a combination of financial statements, credit scores, and background checks to assess a borrower's ability to repay. For businesses, collateral may also be required to secure the loan.
Q: What are the common challenges faced by moneylenders in the Philippines?
A: Common challenges include managing credit risk, ensuring compliance with strict regulations, handling late payments or defaults, and maintaining profitability while offering competitive loan products. Effective risk management and operational efficiency are key to overcoming these obstacles.
