SSS eases business, social loan terms

The Social Security System on Friday announced it had eased the terms and requirements for its social and business loans.

The move, it said, was aimed at making its financial services more accessible to enterprises.

Besides providing financial services to individual members, the SSS also provides loans to its member-enterprises.

Under the new rule, the interest rate on the business and social loan will be fixed for one year, but will be flexible thereafter to reflect prevailing rates.

The SSS offers loans to companies that remit contributions to the pension fund for their employees.

The longest tenor of the SSS loan is 15 years, which the state fund says is longer than the maximum of 10 years offered by banks.

In a statement, SSS president and chief executive officer Emilio de Quiros Jr. said that making the interest rates on social and business loans flexible would effectively lead to lower interest rates, as current levels remained relatively low compared to those in the past few years.

“The revised guidelines allow monthly adjustments of interest rates based on prevailing market rates (after the one year fixed rate). Our lending programs now offer their lowest rates since the launch of our first corporate loan facility in 1988,” he said.

He said interest rates on SSS loans for companies now range from 7.5 to 11.25 percent, depending on the loan term. This is about three percentage points lower than the fixed interest rates of 10.5 to 13.5 percent interest applied prior to the implementation of new guidelines, De Quiros said.

In the meantime, De Quiros said the SSS had also expanded the list of industries that were allowed to avail themselves of the social and business loans.

“To support the local economy, we also opened our loan programs to the extractive industry such as mining, dredging, oil and gas exploration,” De Quiros said.

He said enterprises that were into the extraction of minerals, oil and gas, and that want to borrow from the SSS must first secure an environmental compliance certificate from the Department of Natural Resources and other concerned agencies.

Making its loans more accessible to enterprises forms part of the SSS’ initiative to expand its investment options, such as through increased lending.

Earlier, De Quiros said the SSS likewise intended to beef up its equities investments.

It currently has equity investments in companies belonging to the telecommunications, mining and banking sectors.

In particular, the SSS has stakes in companies like PLDT, Philex, Security Bank and Union Bank.

De Quiros said the pension fund was considering investing in other sectors, including energy, to take advantage of potential growth of the stock market.

Its charter allows the SSS to allocate as much as 30 percent of its funds for investments in equities. De Quiros said the state-owned firm had so far invested only 21 percent in equities. This means it can still afford to more invest in stocks.

Given the P20-billion ceiling, De Quiros said the SSS still had P20 billion to invest.