Banking and Finance News

SEC Recalibrates Ceilings of Interest Rates and Other Fees Charged by Financing and Lending Companies

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On 10 December 2025, the Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No. 14, Series of 2025 (Circular) which provides for the recalibrated ceilings on interest rates and other fees charged by financing companies (FCs) and lending companies (LCs). The Circular applies to all unsecured, general-purpose loans offered by FCs and LCs that do not exceed the amount of Ten Thousand Pesos (PhP10,000.00) and loan tenor of up to four (4) months that are entered into, restructured, or renewed beginning 01 April 2026.

 

The Circular prescribes the following ceilings on interest rates and other fees for covered loans:

 

  • A Nominal Interest Rate (NIR) ceiling of 6% per month (equivalent to approximately 0.20% per day).
  • An Effective Interest Rate (EIR) ceiling equivalent to or not more than 12% per month (equivalent to approximately 0.40% per day), for loans that do not exceed the amount of Ten Thousand Pesos (PhP10,000.00) with a tenor of up to four (4) months which shall include the NIR along with all other applicable fees and charges (i.e., processing fees, service fees, notarial fees, handling fees and verification fees, among others), but excluding fees and penalties for late payment and non-payment.
  • A cap on penalties for late payment or non-payment at 5 percent per month on the outstanding scheduled amount due.
  • A total cost cap of 100 percent of the total amount borrowed (applying to all interest, other fees and charges, and penalties) regardless of the time the loan has been outstanding.

 

The Circular further provides for the following administrative sanctions for non-compliance with the aforementioned prescribed ceilings:

 

  • First Offense – Fine of Fifty Thousand Pesos (PhP50,000.00)
  • Second Offense – Subject to the facts, circumstances, and gravity of the offense, the SEC, at its discretion, may impose a fine of not less than twice the penalty for the first offense but not more than One Million Pesos (PhP1,000,000.00); and/or Suspension of financing and lending activities for a period of sixty (60) days.
  • Third Offense – Revocation of the Certificate of Authority and Certificate of Incorporation

 

Any form of circumvention or attempt to circumvent the ceilings and regulatory coverage, whether by restructuring, repackaging, splitting of loan amounts, recharacterization of fees, shifting of loan tenor, simulated collateral, sham guaranty arrangements, imposition of disguised charges, or any analogous scheme, shall constitute a violation and shall, upon due notice and proper investigation, subject the concerned FC or LC, and responsible officers, to administrative sanctions under Republic Act No. 8556 or the Financing Company Act of 1998 (FCA), the Republic Act No. 9474 or the Lending Company Regulation Act of 2007 (LCRA), and Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act (FCPA), without prejudice to criminal, civil, and other regulatory actions available under existing laws and applicable jurisprudence.

 

The full issuance may be accessed here.

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