SSS cuts social, business loan interest rates

STATE-RUN Social Security System (SSS) said it cut the interest rates of its social and business loans to encourage more businesses, schools and hospitals to avail of its credit facilities as well as spur economic activity.

Romulo Neri, SSS president, said the adjustments, which took effect on July 1, follow the downward trend in local banks’ lending rates.

Based on the latest data from the Bangko Sentral ng Pilipinas, average lending rates declined by 110 to 115 basis points amid the 200-point reduction in its overnight rates.

“We lowered our interest rates to generate more employment by helping enterprises expand their operations and members set up their own businesses,” Neri said.

“This also benefits companies affected by the global financial crisis,” he added.

SSS trimmed its rates from 6 percent to 5.5 percent for loans with a term of one year or less; from 7 percent to 6.25 percent for a term of over one to three years; from 8 percent to 7 percent for more than three up to five years, and from 9 percent to 8.5 percent for over five to 10 years.

The pension fund offers loans of up to P50 million under the Special Financial Program for small and medium enterprises (SMEs).

The program’s objectives are to address the unavailability of credit facility to the business sector by channeling funds through the SSS accredited conduit banks / participating financial institutions, which in turn on-lend the fund to eligible borrowers. The program is also aimed at encouraging the formation and growth of barangay micro-business enterprises and create employment.

Large-scale companies, meanwhile, can borrow P51 million to P500 million under the Industry Loan Program.

SSS offers special loans to tourism projects, hospitals and educational institutions, including vocational and technical schools.

Neri said interest rates are fixed for loans with a term of five years or less, while those for loans with longer terms are subject to review after five years.

SSS business and social loans are coursed through the pension fund’s accredited banks, which charge a spread of not more than 4 percent, he said.

“SSS has released a total of P305 million in social development and business loans so far this year,” the pension fund’ president said.

“Within a span of two decades, SSS granted more than P22 billion in loans to fund over 5,000 projects, which have generated nearly 100,000 jobs, benefited over 168,000 students and created 4,100 additional hospital beds all over the country,” he added.–Lailany P. Gomez, Reporter, Manila Times