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The 2026 interest rate cap on small loans, explained

By MoneyNow editorial deskEvery rate on this page is taken from the issuing authority — SSS, PhilHealth, Pag-IBIG, the BIR, the NWPC or the SEC — and carries the date it took effect. Where a figure cannot be sourced we say so rather than estimate.

A dark wooden beam pressing down on a stack of pale shell tiles, compressing the stack to a lower height.

What the cap covers

SEC Memorandum Circular No. 14, series of 2025, puts a ceiling on what lending companies and financing companies can charge for small, short, unsecured loans: principal of ₱10,000 or less, terms of four months or less, for general purposes. It applies to covered loans entered into, restructured or renewed from 1 April 2026. Banks are outside it entirely — they answer to the Bangko Sentral, not the SEC.

The four ceilings

The circular caps four separate things, and the distinctions matter more than the headline:

  • Nominal interest: 6% a month. The advertised rate before fees.
  • Effective interest: 12% a month. The real monthly cost once processing, service and other fees are folded in. This is the ceiling that bites, because fee-loading is how a lawful-looking 6% becomes an unlawful 20%.
  • Penalties: 5% a month on the amount overdue.
  • Total cost: 100% of principal. Whatever happens, interest, fees and penalties combined can never exceed the amount you borrowed. A ₱5,000 loan can never lawfully cost more than ₱5,000 on top, no matter how long it runs.

Why the effective rate is the number that matters

Lenders quote the nominal rate; the law binds the effective one. A loan advertised at 5% a month with a 10% upfront “processing fee” on a one-month term has an effective rate far above 12%, and it is capped even though the advertised figure looks compliant. Our loan cost calculator works the effective rate out from the pesos you were actually quoted and says plainly whether the offer sits inside or outside the ceiling.

What the cap does not do

It does not touch loans above ₱10,000, terms beyond four months, secured loans, or banks — and some apps structure offers just past those lines for exactly that reason. It also does not rewrite a loan you signed before 1 April 2026 unless that loan is restructured or renewed afterwards. If you are struggling with one of those older loans, what happens if you don’t pay an online loan covers where you actually stand.

What it means on this site

We score every provider’s cost of credit against this ceiling. A provider whose own published example prices above the cap for a covered loan scores zero on that criterion and loses its prominent buttons — the rule is written into how we rate, not applied by mood. The online loan comparison shows the result per provider.

Providers, with what they publish about cost

The rate on each card is the provider’s own figure. Run it through the loan calculator to see whether it sits inside the cap.

We earn a commission when you apply through some of these links, which can affect the order. It never affects the rating, the lender/marketplace label or the SEC status.

See every provider for online loans in the philippines →

Questions people ask

Does the SEC interest rate cap apply to banks?

No. The ceilings cover lending companies and financing companies under SEC supervision. Banks answer to the Bangko Sentral and are outside this circular entirely.

My loan is ₱15,000 — is it covered?

No. The ceilings apply to unsecured general-purpose loans of up to ₱10,000 with terms of up to four months. A ₱15,000 loan, or a six-month one, sits outside them — which is exactly why some apps steer borrowers just past those lines.

What if a covered lender is charging above the cap?

Put the quoted figures through our loan calculator to document the effective rate, keep the screenshots of the offer, and file a complaint with the SEC. The cap applies to covered loans entered into, restructured or renewed from 1 April 2026 regardless of what the contract says.

Sources

Last updated 2026-08-15.