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STATE-RUN Social Security System (SSS) cut its
interest rates to extend more loans to small and medium enterprises
(SMEs).
In a statement, Edgar Solilapsi,
the pension fund’s senior vice-president for investments, said SSS
has cut its interest rates in response to the government’s call
for state-run financial institutions to increase the SME sector’s
access to credit.
“We reduced our rates to
maintain competitiveness and to conform with the current trend of a
low interest environment,” Solilapsi said.
Specifically, SSS aims to assist
schools, hospitals and other businesses for expansion or start-ups
so they can generate additional employment.
“The reduction in the interest
rate is part of SSS’ efforts to stimulate businesses in the
country,” Solilapsi said.
SSS offers business and social
loans including the Special Financing Program for SMEs, the
Financing Program for Tourism Projects, the Hospital Financing
Program, the Financing Program for Educational Institutions and the
Industry Loan Program.
The interest rates for special
financing programs would be reduced from 7 percent to 6 percent for
terms of up to a year; from 8 percent to 7 percent for loans
maturing between one and three years, from 9 percent to 8 percent
for three- to five-year credit windows, and from 10 percent to 9
percent for lending facilities with maturities of over five years.
In effect, the cut reduced the
pass-on rates to banks, which also charge a spread of not more than
4 percent, Solilapsi said.
On the educational and hospital
lending programs, the reduction would be from 8 percent to 7 percent
for one to three year loans, from 9 percent to 8 percent for three
to five year loans, and from 10 percent to 9 percent for loans
maturing in more than five years.
For the industry loan program,
interest rates would be reduced from 8 percent to 7 percent for one
to three year loans, from 9 percent to 8 percent for three to five
year loans, and from 10 percent to 9 percent for loans maturing past
five years.
The amount of loans range from
less than P1 million to P50 million for SMEs, 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.
The interest rate for loans with
a payment term of five years will remain fixed, while interest rates
for loans that mature after five years will be subject to review
after five years.
SSS has released more than P22
billion in the past 19 years to fund more than 5,000 projects under
its business and social loan programs, generating close to 100,000
jobs all over the country.
 --Maricel
E. Burgonio
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