Starting A Lending Business In The Philippines

A lending business in the Philippines is fairly easy to start although many don’t use legal channels instead opting for direct lending called locally 5/6 lending originally coming from Indians where people would borrow 5 then have to repay 6 on short-term loans. These types of ventures exist due to the issues of lending in the Philippines and the inability for many to get credit without collateral. At the same time many Filipino’s are bad payers which is why you see the rates reach as high as 20% a month in some cases. Not just on monetary I have also seen stores go bankrupt due to bad debts on credit for food. This is why Wala utung is commonly seen (No credit) on notices in some stores.

For a legitimate business assessment of the market and also having a good lawyer to prepare the paperwork for your loans is important. Not only because the documents will be written in a legal manner but also countersigned by the lawyer if any legal action is required at a later date. One thing many people aren’t aware of though is “person to person” lending you can sue if an agreement is in place even if your not fully operating as a business. For example a cousin wants to loan from you for a couple of months then having them sign an agreement will give you a legal right to sue them if they don’t repay the loan.

A lending business in the Philippines also comes with many risks such as abuse, threats or even some killings as well as financial risk. The rewards can be financial freedom for the venture owner if managed correctly and by proper assessment of each client to reduce risks of none payment or issues such as people leaving the country.

I would advise the first steps of setting up a lending business though to locate a good lawyer via word of mouth and reputation and discussing your business operations with them to get an idea of the viability of your business. At the same time have there already been lenders doing the same in the area? did they fail due to bad debt? any way to compare notes on bad lenders so you don’t take on some of their bad clients?

The business will at some point also lead to repossessions of items and this is a part of the business many overlook. Do you have people willing to collect goods for you? Its an unpopular part of the business but also one that makes sure people continue to pay on time. If people become aware that you do not pursue people legally you will find your business literally collapse overnight as everyone stops paying their debts because they know you won’t prosecute. Balancing all of the above correctly can lead to a viable business at the same time lending can often be too risky for most.

11 comments for “Starting A Lending Business In The Philippines

  1. LloydChumbley
    November 9, 2011 at 6:46 pm

    I see you never mentioned the laws set forth in the Financing Company Act of 1998.

    A 5/6 lending company falls under this act. It has severe penalties for violations.

    I know of the guy that runs the 5/6 business on Paul’s Cebu website.
    He is under investigation by the NBI, and is looking at some very serious charges.
    First he is a foreigner that does not have visa to be doing business, next he is in violation of the Philippine’s SEC directive on loaning companies.

    A stint in a Philippine jail cell awaiting trial is no fun.

    Why on earth are you promoting this? You are opening yourself for being liable if anyone was stupid enough to take your advice.

    Do some research before promoting this crap.

  2. LloydChumbley
    November 9, 2011 at 6:46 pm

    Have you ever thought that banning someone or their IP address only pisses them off more?

    Easy to get around by using a new IP address or proxy.

    Just making them more determined to annoy you.

  3. Profile photo of OLDARTICLES
    November 9, 2011 at 7:09 pm

    Lloyd your problem is your all over the place with your comments as well as generally aggressive. Add to that your links with Sexpat Wall Of Shame which in general seems a good idea but how much is proof? Sticking me on some grotty Facebook page with criminals just because I won’t let you post on here your abusive messages?? come on what’s wrong with you?

    As regards “Liability” you didn’t read the article my advice is to seek LEGAL ADVICE before entering into the venture as all business ventures because the legalities here change province to province, mayor to mayor as well as costs. But generally I have found your pseudo’s on here (at least 10) and no doubt others have been having the same Trolling by yourself as rather bizarre for someone who’s supposed to be a business professional.

    As regards investigation on someone where is your proof your always on about the proper authorities have been alerted etc. etc. where in your mind?? Lending businesses are everywhere here from NGO’s (yes charities!! which run at around 38% a year interest) to banks and small lending companies. Banks generally like to operate via others because of “morality” guidelines but I suppose you researched that as well? Bit like Gap being for fair wages and no pollution yet finds itself from time to time in the media for things it pretends it doesn’t know about. But maybe they don’t we can all walk round with blinkers on or closed eyes.

  4. Big Dale
    November 9, 2011 at 7:10 pm

    No one cares Lloyd, I got me a loan business down there in Leyte and I run it old school son! I aint paid no taxes or abide no laws gad darnit. I just sit back an collect son. They don’t care about that there laws ya mentioned unless ya happen to be making a quick billion or ya selling that there pookie. Now son don’t you be un American ya hear? It’s everones God givin right to earn dollars from sea to shining sea! And stickin your nose in people business is bound to get ya in some sticky situations especially here in paradise..

  5. LloydChumbley
    November 9, 2011 at 7:19 pm


    Are you doing this business?

    It is a lowlife that would charge someone 20% a month.

    You are really a disgrace.

    Why not promote something better than this crap?

    Maybe NBI, DIT, BIR and Bureau of Immigration would like to know about you.

  6. LloydChumbley
    November 9, 2011 at 7:24 pm


    Can you loan me 50,000 peso?

    Great service you are doing here.

    I guess money lending has been good to you.

    Any ways, I can repay you by December. What will the interest be?

  7. LloydChumbley
    November 9, 2011 at 7:24 pm

    Hey Matt

    This is a great business to rip off the filipinos.

    My buddy and I run a 5/6 scam and are raking in the money.

    It is a lazy man’s way to a fortune.

    Glad to see you come around to my way of thinking.

    Making money off other people’s misery and desperation.

    Life is great here in the Philippines.

    We can sit around and drink Jack Daniels all day and smack around our girlfriends.


  8. LloydChumbley
    November 9, 2011 at 7:25 pm

    I would be very careful about posting this info.

    5/6 money lending is not legal unless registered and licensed.
    Also there are laws restricting the amount of interest that can be charged.

    Yes, many are doing this business, but with great risk. And it does not make it legal or right. You really should know better.

    For you to promote this immoral business is repulsive.

    Please do some research about the laws of your host country before you blog about an illegal business. Also foreigners are not allowed to operate a business without the proper visa.

    I once thought you had some morals and principles, but now think of you as the likes of your buddy Paul Petrea. Do you beat your wife too?

    Next we will see post on dealing shabu. It can be a big money maker too.

  9. LloydChumbley
    November 9, 2011 at 7:26 pm


    I think you are irresponsible for posting this as a business.

    Lending businesses are essentially illegal if not registered as a business.
    One disgruntled borrower and one could be facing serious charges.
    One could face a stay in prison while awaiting a trial. Or even as you say, death.
    Yeah, this is a great business for someone to get into.

    Your blog entry illustrates all the pitfalls, so why even promote this as a business?

    Why not just promote drug dealing? It also has it’s rewards.

  10. Profile photo of OLDARTICLES
    November 9, 2011 at 7:33 pm

    How much junk can you post in a day?

    At which point did I say I operate this business?

    At what point did I advise people to go ahead and do it?

    The post is in relation to the fact this business exists and operates here showing both sides of the operations good and bad.

    Why don’t I let you post.. take a wild guess! your nuts!

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