Small-scale and medium enterprises can now avail of business and social loans of the Social Security System after the agency lowered its interest rates to align with prevailing industry standards and encourage small-scale enterprises to avail of the said credit facility.
The reduction is in line with the government’s call for government financial institutions to increase small and medium credit access, and part of SSS’ efforts to stimulate businesses in the country.
SSS senior vice president for investments Edgar Solilapsi said, the cut which took effect last April is meant to assist schools, hospitals and other businesses for expansion or start-ups and to generate additional employment.
“We reduced our rates to maintain competitiveness and to conform to the current trend
of low interest environment,” Solilapsi said.
SSS offers the following business and social loans - special financing program for small and medium-scale enterprises; financing program for tourism projects; hospital financing program; financing program for educational institutions, including vocational and technical schools; and industry loan program.
The interest rates for special financing program would be reduced from seven to six percent for terms of up to a year; from eight to seven percent, for over one to three-year term; from nine to eight percent for over three to five-year term; and from 10 to nine percent for loan terms of over five years.
On educational and hospital lending programs, the reduction would be from eight to seven percent for one to three-year term, from nine to eight percent for terms over three up to five years; and from 10 to nine percent for loan terms over five years.
Industry loan program interest rates would be reduced from eight to seven percent for one to three-year term; from nine to eight percent for terms over three up to five years; and from 10 to nine percent for loan terms over five years.
The amount of loans ranges from less than P1 million up to P50 million for small and medium enterprises; from P51 million up to P500 million for large-scale enterprises; and up to P350 million for schools and hospitals.
Solilapsi said all loans are coursed through SSS-accredited banks, adding, “In effect, the cut reduces the pass-on rates to banks, which also charges a spread of not more than four percent.”
He said the interest rate for loans with a payment term of five years shall remain fixed, while interest rate of loans which have a term of more than five years shall be subject to review after five years. — Jasmin R. Uy/MEEV