The recorded total number of business enterprises operating in the Philippines is 1, 109, 684, according to Philippine Statistics Authority (PSA). Of these, 1,105,143 (99.59%) are MSMEs and 4,541 (0.41%) are large enterprises. Thus, these large numbers indicate the growing competition in the market.

Of course, you don’t want to get left behind by your business competitors. To ensure the growth of your business, you need to have enough funds. One great source of financing is getting a business loan. However, the process of getting a business loan can be exhilarating and intimidating to start  

You need to consider numerous considerations to guarantee a successful application. Hence, to achieve a seamless and fruitful loan application procedure, business owners must be thoroughly aware of the legal landscape. In this blog, we’ll guide you through seven key laws that should be on your radar when seeking financial support from lending companies.

Importance of Knowing the Laws

It is crucial to comprehend the laws about business loans when applying for them for several strong reasons. 

First and foremost, legal compliance guarantees that your business operates within ethical bounds, fostering transparency and integrity throughout the loan process. Knowledge of laws empowers you to make informed decisions, safeguarding your business from pitfalls and ensuring fair treatment.

Furthermore, knowing about the laws, keeps your business safe from predatory loan practices, excessive interest rates, and unapproved usage of confidential data depends on legal compliance. 

In the end, having a thorough understanding of these legal frameworks helps you negotiate better terms and reduce risks, which will help your business build a solid basis for long-term financial success.

Laws To Consider When Applying For A Business Loan

As you set out to secure funding, it’s vital to be aware of the pertinent laws that can impact your loan application. Here is a brief guide to highlight the key legal considerations: 

Truth in Lending Act (TILA)

The Truth in Lending Act requires that the terms and conditions of loans be disclosed openly and transparently. You need to know the interest rates, periods of repayment, and any additional costs as a business owner. 

To help you make decisions, make sure the lender gives you a thorough and understandable summary of the business loan conditions.

Equal Credit Opportunity Act (ECOA)

By virtue of the Equal Credit Opportunity Act (ECOA), lenders are not allowed to treat borrowers differently on the grounds of their age, marital status, race, color, religion, national origin, sex, or receipt of public assistance. 

Make sure that your loan application is assessed exclusively based on your business’s creditworthiness and that you are aware of these protected classifications. 

Fair Credit Reporting Act (FCRA)

The FCRA governs the gathering and application of credit data about consumers. Make sure your credit record is accurate before asking for a business loan, and take care of any inconsistencies. Giving the most accurate account of your financial history is crucial since lenders evaluate this information to determine your creditworthiness.

Bangko Sentral ng Pilipinas (BSP) Regulations

If you are thinking of taking out a business loan in the Philippines, familiarize yourself with the guidelines that the Bangko Sentral ng Pilipinas (BSP) has established. As different loan programs could have different terms and eligibility requirements, make sure your business complies with BSP regulations to increase the likelihood of getting approved.

Usury Laws

The maximum interest rates that lenders can charge are limited by usury regulations. To avoid being a victim of predatory loan tactics, familiarize yourself with the usury laws. You can negotiate fair and reasonable interest rates for your business loan by being aware of these requirements.

Fair Debt Collection Practices Act (FDCPA)

Even though it focuses on consumer debt, the FDCPA can nonetheless teach us about ethical debt collection techniques. When collecting debts, lenders are required by law and ethics to follow certain guidelines, which guarantee that you will be handled fairly and with respect during the payback process.

Privacy Laws

It’s critical to protect sensitive corporate data. Learn about privacy rules, particularly those that pertain to financial data. Verify that the loan company has strong security procedures in place to protect the private information belonging to your business organization.

Vidalia Loans

Acting rashly when it comes to financing your business can harm your business. Thus, it is important to look at every possibility and consideration, especially when it comes to law, to make a sound decision. 

At Vidalia Lending Corp. we offer flexible business loans to help your business grow. Not only that, we can guarantee you that we provide financial assistance in accordance with Philippine laws and regulations. So, you don’t have to worry. Contact us today to learn more.