SEC sets 6% cap on loans below 10K

The Securities and Exchange Commission (SEC) has taken up the cudgels for small borrowers, especially those who have been victimized by predatory lenders online.

The SEC issued an order putting a cap of 6 percent per month or 0.2 percent a day as nominal interest rate that lending firms can charge on loans worth P10,000 and below.

The corporate regulatory body said it is taking tougher measures against schemes that have victimized poor Filipinos in “cycles of debt.”

The agency even urged the public last month to send in their comments until Nov. 14 on a draft memorandum circular that seeks to curb “predatory” lending practices.

In its Memorandum Circular No. 14 series of 2025 dated December 10, the SEC said the recalibrated ceiling on interest rates is necessary to  “uphold consumer protection while ensuring the continued viability and competitiveness” of legitimate financing and lending companies.

Aside from imposing a ceiling on the nominal interest rate, the corporate regulator slapped an effective interest rate cap of 12 per month or 0.4 percent per day.

Effective interest rate refers to the total nominal interest paid plus other fees and charges, excluding penalty and late payment fees.

The SEC also capped penalties for late or non-payment at 5 percent per month on the outstanding scheduled amount due.

The SEC also imposed a total cost cap on the total amount borrowed — applying to all interest, other fees and charges, as well as penalties.

These caps will apply on loans that do not exceed P10,000 with a tenor of up to four months contracted, restructured, or renewed starting April 1, 2026.

The SEC is headed by Atty. Francis Edralin Lim as chairperson.