Ask this question: How much is the red tag worth?
To some people, it's not worth much, they can always create or buy another account.
If I were to offer loans, I would ask for NBI Clearance. (and a whole bunch of other identification / documents.) You know how it is having lent in the physical world.
I understand what you are trying to imply but this small amount is not worth requiring them to present a valid document to show their personal information. I would not even show my identity here if you will give me Php 5,000...
And since the collateral is not that good to force a borrower to pay, maybe I will only extend loan to those borrower who has a co-maker with a good standing in the community and also the capacity to pay is necessary as well.
If this certain person cannot pay, then I have to red tag as well the co-maker if he cannot pay also.
I was thinking of requiring at least 1 co-maker for smaller loan and 2 or more for a higher one. I guess that would be a great method.
Like in real world lending, there's a group liability, so I might as well do that here. I don't know the concrete procedure yet, I have to study it carefully, hence your suggestion are very welcome and appreciated.
So just put above your OP that this is just a micro loan. NSO certifide birth certificate is enough for identity confirmation without taking too much time. Or else selfie with their bitcoin name tag is good too. But you need first clear your reputation before start business or made new account for it