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Why loan apps are so popular in the Philippines… for better or worse |

The Budgetarian

Why loan apps are so popular in the Philippines… for better or worse

Halee Andrea Alcaraz -
Why loan apps are so popular in the Philippines⦠for better or worse
More than 50 million Filipino adults are unable to apply for bank loans. To address their financial needs, many have turned to loan apps.
Photos: Sound On; EC Toledo | Illustration:

When things go wrong and money gets tight and we run out of people to ask for help from, advances in technology could save the day. And such advances could come in the form of loan apps.

Southeast Asia is currently seeing a fast-paced growth in the financial technology industry, which includes online lending companies.

While there is no available data that shows the exact number of Filipinos using loan apps right now, a recent report from the Foundation for Media Alternatives states that the popularity of loan apps and microloans is evident, especially in the Global South, which consists of Africa, South America, the Caribbean, Pacific Islands and the developing countries in Asia.

The FMA report, penned by Filipino researcher Jamael Jacob, the organization’s policy and legal advisor, shows that the Philippine population fits the target market of online lending companies.

Here, almost 80% or 52 million of adult Filipinos are unable to apply for bank loans.

In 2019, there were 124 online lenders in the Philippines, of which 75 had mobile apps, 40 were web-based and five were “brick-and-mortar outfits” that only had their own digital platforms, the FMA study noted.

There are two reasons why loan apps thrive in the Philippines:

1. Loan apps are accessible.

Three people interviewed by The Budgetarian who asked to remain anonymous confirmed that almost the entire process of loaning through a digital platform, from the registration to receive the money, is done online.

Unlike applying for a loan in banks, using loan apps saves a lot of time and effort because one does not need to wait in queue and fill out papers. Clients are also not limited to applying for loans during business days because the apps are available all the time.
Jocelyn (not her real name), who applied for a loan in November 2020, said that she was able to complete the application process in just five minutes and immediately received the money.

2. Loan apps have minimal requirements.

Depending on the bank, loan requirements include at least two valid government-issued IDs; proof of income documents such as payslips, the latest Bureau of Internal Revenue Form 2316 or an ITR; proof that one is a Filipino citizen or foreigner residing in the Philippines for over two years; certificate of employment; and bank statements.

Meanwhile, online lending apps do not require that much from customers, making these platforms the easy choice.

Three people interviewed for this story said they only had to present one valid ID and provide their personal background, including their names, occupation and work address, and contact references.

Keep in mind that all these requirements are submitted digitally, so the only things needed by a borrower is a smartphone, internet connection and the required documents.

However, anyone looking to use loan apps for their personal financial needs must take caution because while doing things online is convenient, these platforms may present more danger than the actual benefit if used carelessly.

In the next part of this story, we will discuss problems that could arise from using a loan app without doing proper research.

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