SSS slashes interest rates on business loans

SSS slashes interest rates on business loans

The Social Security System (SSS), the pension fund for private-sector employees, has lowered the interest rate and relaxed its requirements to make it easier to firms to tap its business and social loans.

"The agency revised its loan guidelines to give companies easier access to credit, boost employment and expand SSS membership," SSS President and Chief Executive Officer Emilio S. de Quiros, Jr. was quoted as saying in a statement.

"Members have long been requesting SSS to lower its interest rates," Guillermo M. Urbano, Jr. told BusinessWorld in a phone interview on Friday.

The interest rate on a loan with tenor of less than a year has been slashed to 7.5% from 10.5%. That of a one- to three-year loan has been cut to 9.75% from 11.25% while loans with a tenor of three to five years has been lowered to 10.25% from 12%. Loans with tenor of more than five years and up to 15 years has been brought down to 11.25% from 13.5%.

Mr. Urbano said that the pension fund expects the number of loan applications to increase as a result of the move.
SSS launched its corporate loan facility in 1988.

Firms that tap the loans may use these to buy existing structure, expand or diversify businesses, and fund projects on forest development and sustainable energy. SSS has also opened the facility to companies engaged in mining, dredging, oil and gas exploration; companies engaged in these extractive industries, however, must present an environmental compliance certificate from the Department of Environment and Natural Resources.

"We now also allow schools, hospitals and tourism businesses to use the loan as working capital to tide them over during the lean months, which was not possible in the past," Mr. De Quiros also said. "It eases financing needs of hospitals waiting for payments of patients using health cards or credit cards."

Other eligible borrowers include owners of businesses engaged in agribusiness, food processing, manufacturing, services, commercial production, real estate development, utilities, transportation and communication.

Companies that wish to apply for business and social loans with SSS may course their loan applications through the pension fund’s accredited financial institutions such as the Development Bank of the Philippines, the Land Bank of the Philippines, the Philippine Veterans Bank and Planters Development Bank, among others.

The SSS business loan programs include:

• Financing for Tourism Projects;

• Financing for Industry Loan Program;

• SSS Special Financing Program for small and medium enterprises (SMEs); and

• SME Unified Lending Opportunities for National Growth (SULONG) Program also for SMEs.
Social loan programs, meanwhile, include:

• Special Financing Program for Vocational and Technical Schools; and

• Financing Program Educational Institutions.
SSS said it has released more than P23 billion to fund 5,072 projects that have generated 99,300 jobs, created 4,125 hospital beds and provided school facilities for almost 168,000 students.

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