If you run or plan to run a lending business in the Philippines, RA 9474 is the one law you must actually understand. It defines what a lending company is, who may operate one, and what happens if you don't play by the rules. Everything else — your SEC reports, your interest-rate disclosures, your penalties — traces back to this act and its implementing rules.
Here is what RA 9474 says, in plain language, and why each part matters to your day-to-day operations.
What RA 9474 regulates
The law defines a lending company as a corporation engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen persons. That definition draws the line between a lending company and a bank or an investment house (which take deposits from the public and are regulated by the Bangko Sentral). If you lend your own or a small group's money, RA 9474 is your framework.
The act is administered by the Securities and Exchange Commission, which issues licenses, sets capital and reporting rules, and enforces penalties. This is why the SEC — not the BSP — is the regulator most lending founders deal with.
The core requirements
RA 9474 imposes a handful of non-negotiable requirements. Get these right and you are on solid legal ground; ignore any of them and you are exposed.
Interest rates and disclosure
RA 9474 works hand-in-hand with the Truth in Lending Act (RA 3765) and SEC circulars on transparency. While interest rates were largely deregulated after the suspension of the old Usury Law ceilings, the SEC has issued circulars capping interest and penalty charges for certain consumer and online loans, and it continues to police unfair collection practices. The through-line is disclosure: you must tell borrowers the effective interest rate, the finance charges, and the total amount they will pay, clearly and before they sign.
Deregulated rates do not mean "charge anything." The SEC has capped charges on specific loan types and penalizes abusive collection — and full, honest disclosure is always required.
Lending company vs financing company
A point of frequent confusion: a lending company under RA 9474 is not the same as a financing company under RA 8556 (the Financing Company Act). Both are SEC-licensed and both extend credit, but financing companies are geared toward leasing, receivables discounting, and financing the acquisition of goods, and they carry higher capital requirements. Choosing the wrong structure at the start is costly to unwind, so match your license to what you actually do: if you grant cash loans from your own funds, the lending-company framework under RA 9474 is almost always the right home.
Online lending falls squarely under RA 9474
Moving your lending online does not move you outside the law. An online lending platform or app is still a lending company and needs the same Certificate of Authority, plus registration of the specific business name or app with the SEC. The Commission has been especially active here, shutting down unregistered lending apps and penalizing abusive digital collection practices such as contact-list harvesting and public shaming. If you lend through an app or website, assume every RA 9474 obligation applies to you in full — and that the SEC is watching digital lenders more closely than most.
Penalties for non-compliance
The teeth of RA 9474 are its penalty provisions. Operating a lending business without a Certificate of Authority is a criminal offense, punishable by fine and imprisonment, and the SEC has aggressively pursued unlicensed online lending operators. Even for licensed companies, violations — false statements in your application, failure to file reports, abusive collection — can bring fines, suspension, or revocation of your license.
How software helps you comply
Much of RA 9474 compliance is really recordkeeping and disclosure — areas where the right system removes human error. Transparent amortization schedules make honest disclosure automatic. Clean, examiner-ready books make your SEC reports painless. And a compliance calendar keyed to your registered tax types keeps you ahead of deadlines. LendKoPH is built around exactly these needs, so following RA 9474 becomes part of how you operate rather than a separate chore.
RA 9474 is not complicated once you see its logic: be a properly licensed corporation, tell borrowers the truth, treat them fairly, and keep your paperwork current. Do that consistently and the law is on your side.
Frequently asked questions
What is RA 9474?
Republic Act No. 9474, the Lending Company Regulation Act of 2007, is the law governing lending companies in the Philippines. It is administered by the SEC and sets the rules for licensing, capital, disclosure, and penalties.
Is it illegal to lend without a Certificate of Authority?
Yes. Operating a lending business without a Certificate of Authority from the SEC is a criminal offense under RA 9474, punishable by fine and imprisonment.
Does RA 9474 set a maximum interest rate?
Interest rates were largely deregulated, but the SEC has issued circulars capping interest and penalty charges on certain consumer and online loans, and full disclosure of the true loan cost is always required.
Who regulates lending companies — the SEC or the BSP?
The SEC. Lending companies under RA 9474 are licensed and supervised by the Securities and Exchange Commission, not the Bangko Sentral, which regulates banks.
