SSS Loans of September 2023

A government organization in the Philippines called the Social Security System (SSS) provides social insurance benefits to Filipinos. The SSS offers coverage for various unforeseen events, including disability, death, and unemployment. An individual must be employed, self-employed, or volunteer to join the SSS. The employee's contributions must be taken out of their pay by the employer and sent to the SSS along with their portion. Various benefits are available to SSS members. They have the right to utilize additional services, including loans and healthcare advantages.

What is an SSS loan?

The most popular program offered by the SSS is the SSS loan (Social Security System loan). Members of the program may borrow a maximum amount equal to two times the average of their 12 most recent filed monthly pay credits. It has a 10% annual rate of interest and is based on a principal balance that decreases throughout 24 monthly payments. SSS loan is a financial advance given to a self-employed, voluntary, or employed member who is currently making payments. It is meant to satisfy the member's immediate credit needs.

What are the major types of SSS loans?

SSS offers three types of loans: salary, housing, and business.

SSS salary loan

Citizens of the Philippines who work for pay or are self-employed are automatically members of the SSS. This organization offers members several advantages, including a wage loan that active, paying members may use. Members who borrow money may voluntarily be employees, independent contractors, or donors. This loan is intended to cover the applicant's immediate financial needs.

The amount for a one-month loan is equal to the average of the borrower's recent 12 month salary credit, or MSCs, or the amount requested, whichever is lesser. Similarly, if they apply for a two-month salary loan, it will be twice their monthly average, or MSCs, or the actual amount requested, whichever is lesser.

If you have made 36 monthly contributions, of which 6 have been in the last 12 months before you fill in your application, you can borrow up to ₱15,000, or a loan for one month's wage, according to another straightforward calculation. This is the typical loan amount for first-time applicants (minus taxes).

You need to have 72 monthly contributions for a two-month loan, with 6 of those being posted in the previous 12 months, just like for a one-month loan. Taxes excluded, you may borrow up to ₱30,000 for this. This is what you can anticipate receiving if this is your second or subsequent application and there are no unpaid balances.

SSS housing loan

In order to help working Filipinos with their housing costs, home loan assumptions, and house repairs, the SSS housing loan was formed. The social security system gives selected individuals an SSS housing loan, a government-run social insurance program. SSS housing loans may have many benefits but are not as commonly used as other housing loans. An SSS housing loan can be used to buy a lot on which to build a new home. It can also be used to buy an existing residential property such as a house and lot, condominium, or townhouse. Or, you can also use it to build a new home on a lien-free lot that you already own.

Types of SSS housing loan

SSS direct housing loan for workers' organization members. This mortgage is only available to Filipinos who are registered with government organizations like the Workers Organization. This includes local and national unions or private sector organizations. It can be used to purchase a lot and build a home, buy an existing one, or construct a house on an owned lot. The interest rate for this housing loan starts at 8%. This is the lowest rate of interest among the SSS housing loan programs. You can apply for a loan of up to ₱2,000,000, with an interest rate of 11% per year. The loan term offered here is 5 to 30 years. You may request any amount you need, but the SSS's final decision is entirely at its discretion and will be based on your monthly contribution, current financial responsibilities, and income.

SSS direct housing loan for OFWs. OFWs (oversea Filipino workers) involved in the community are eligible for this housing loan. In reality, among OFWs, SSS housing loans are well-known.

The institution is aware that OFWs struggle to save money for their families. Therefore, a housing loan tailored especially for them is a tool to assist them in creating a home for their families still in the Philippines. The financing can be used to buy a land and build or construct a house on a property that is already owned. You may borrow ₱2,000,000 with a maximum interest rate of 11% per year, payable over 15 years. Additionally, you can borrow less money at a lower interest rate.

SSS housing loan for repairs and improvements. This is available to SSS active members who have never been approved for a repair and improvement loan from the SSS, and it is only for home renovations and improvement and not for the purchase of a home. You can also apply for such a loan if you plan on making major repairs if your home is deemed unsafe or if you are renovating it for expansion to increase its value. The constructed parts of a building must be permanently attached to the house. If your home needs finishing, a deep well, or a motor pump, you may also be eligible for a loan. If you want to build a fence and gate around your home, make sure that the materials are concrete or steel. You can borrow up to ₱1,000,000 at an interest rate of 9% per annum. If you apply for a period longer than 15 years, the interest rate will be re-calculated. You will have to pay a processing fee of 12 of 1% of your loan amount, or ₱500, but it will not be more than ₱3,000. The SSS is so strict about the intended purpose of the loan that it requires an inspection to ensure the rules are followed. The processing fee will be deducted from the first loan release. Regardless of whether your property is in Manila or outside, the inspection fee is ₱500.

The primary applicant needs to meet the requirements are listed below:

• The borrower must have at least 36 months of SSS membership and 24 consecutive months of contributions before application.

• Members must not be older than 60 at the time of application.

• The SSS or NHMFC did not previously award the member a loan for repairs or improvements.

• Final SSS benefits have not been paid to the member.

• Borrower and spouse are kept up to date on the repayment of any other SSS loans they may have.

SSS business loan

The social security system's business development loan facility is a lending program to assist businesses. It can help businesses with financing for expansion, diversification, and other business development projects to boost productivity and potential earnings.

Through its SSS business loan program, the social security system (SSS) offers loans to SSS members who operate their businesses. All loans that the participating financial institution (PFI) approves are subject to an amortization plan. All loans have a maximum length of 15 years, and principal payments have a three-year grace period. They are entitled to a more extended payment period for loans utilized for initiatives related to forest development or business development in the extractive industries. No more than 25 years are permitted, and any collateral accepted by the PFIs and SSS can be used as security for the loans. Apart from that, the interest rates are revised every month. Depending on the current SSS passage rate to PFI and the spread of the PFI, it can be either variable or constant. The debt-to-equity ratio's lowest value represents the maximum sum borrowers may take after financing shouldn't be more significant than 3:1.

The amount borrowed from the SSS should not exceed 5% of the SSS Investment Reserve Fund (IRF). Be aware that loans utilized for the following purposes are typically approved:

• Site construction

• Modernizing or improving current facilities

• Building construction or repair, as well as other civil works

• Purchasing, repairing, or updating machinery and equipment and furniture

• Purchasing existing facilities.

To apply for this loan, you should be operating a one-person businesses and corporations (or partnerships) with at least 60% Filipino ownership. Cooperatives and non-governmental groups are also included in this.

Apart from that, any enterprise authorized by Philippine law operates in the country. Here are a few industries showcased by SSS that can apply for a business loan:

• Agri-business. Contract agriculture and aquaculture

• Processing food. A meat processing plant, an oil mill, a feed mill, etc.

• Manufacturing. Clothing, ceramics, textiles, furniture, and building supplies

• Business production. Mainly food, essential consumer goods, and export-oriented products

• Service-oriented businesses. Utilities, communications, warehousing, transportation, etc.

• Projects relating to tourism. Inn, vacation spot, theme park, etc.

• Projects for developing real estate. Industrial estate construction

• Projects for sustainable energy. Establishing green structures, installing waste management systems, building sewage treatment facilities, etc.

• Industry of extraction. Projects including mining, quarrying, dredging, and oil and gas extraction

• Projects to develop forests. Projects involving plantations, reforestation, regeneration, and other aspects of forests

• Trading industry. Leasing/lending industry

Here are few other things to note before you apply for a loan:

• Applicants Must have a good record which proves the profitability of their existing enterprises.

• The company should have had a positive average income over the previous two or three years if it had losses in any of the last three years.

• The three-year track record of profitability may be waived for businesses that began operations within the last five years. The prediction of profitable operations with a debt-to-equity ratio not exceeding 3:1 following financing should be justified by the borrower.

• The applicant must be an employer-member in good standing.

How to apply for an SSS loan?

The method of application for SSS is different for each loan type. Basically, you can apply for an SSS online and offline, though the online method is more convenient. To apply offline, visit any SSS office and state the reason for the visit, following the directives that will be given, but to apply online, follow the processes below. You can use the My.SSS portal to apply for a salary loan online. If you haven't registered yet, you must register to be eligible. Once your registration has been approved, follow these easy instructions:

• Go to My.SSS and sign-in. Then, select E-services.

• To apply for a salary loan, click on it. Your available loan amount will be shown automatically (note: you can choose to borrow a lower amount).

• Depending on the method you choose, you will receive the loan proceeds through PESONet banks, an E-wallet, a Remittance Transfer Company (RTC), or a Cash Payout Outlet (CPO). It will be approved by the SSS for the Disbursement Account Enrollment Module (DAEM).

• Make sure to read the terms and conditions carefully. Before choosing Proceed, check the I agree to the terms of the service box.

• The loan disclosure statement will be visible. Download it or print it off and take your time reading it.

• Click Submit after reading the statement.

• You'll see a confirmation message following submission. For future use, note the transaction number or consult the email notification issued to your registered email address.

The SSS now asks members enrolling on a disbursement account to upload proof of account ownership when requesting a loan. This is done to safeguard My.SSS accounts against fraudulent transactions and guarantees that the SSS member who applied for the loan receives the loan profits. You can upload any of the following documents for payments made through bank accounts:

• An ATM card. The bank's name and the account holder's name displayed on the ATM card must match the applicant's data.

• Bank statement or certificate issued following a 2019 foreign remittance receipt

• Passbook

• A screenshot of the online or mobile banking account displaying the applicant's name.

• Valid deposit receipt

• A screenshot of the app accounts for payments made using e-wallets.

How to apply for an SSS housing loan?

To apply for an SSS housing loan:

1. Go to an SSS office where you intend to apply for a loan and request a copy of the application form.

2. Fill in the information that is true and accurate.

3. Prepare all the necessary documents to apply for an SSS Housing Loan for home repairs.

4. Send the completed loan application form and the required documentation to an SSS office.

The SSS team will examine the borrower's eligibility and all supporting documentation. If your application and requirements are accepted, you will be guided through the following step based on the SSS office's standard operating procedure for loan applications.

How to apply for the SSS business loan?

Some prerequisites must be met for SSS members who want to apply for the business development loan facility. Whether you meet the conditions, proceed. If not, check the prerequisites to see if you qualify. A participating financial institution that is SSS-accredited administers the SSS business loan (PFIs). Ask for a copy of the form and the requirements at the PFI. You may apply for an SSS business loan to any of the PFIs listed below, according to the SSS website:

• BDO Unibank Inc, Equitable PCI Bank Tower 1, Makati City. Call or email a senior manager Vivian D. de Chavez for comments, concerns, and inquiries via the phone numbers: 878-4567, 878-4570 (fax).

• Development Bank of the Philippines, Sen Gil Puyat Avenue in Makati. Contact the manager of the SME unit and officer-in-charge, Mr. Jose Pepito A. Yusingbo and Leonor L. Tianco, for comments, concerns, and inquiries through the phone numbers: 812-9932 and 818-9511, ext. 2305

• Land Bank of the Philippines, Malate, Manila, 1598 M. H. del Pilar, Land Bank Plaza. Call the program officer Ms. Lina Soriano for comments, concerns, and inquiries through 405-7640, 522-2200, 551-2200, and 405-7198

• Philippine National Bank, PNB Financial Center, Floor 3, Pasay City's Pres. Diosdado Macapagal Boulevard. Call the financial institutions' division's assistant manager 2, Ms. Katrina Jane O. Mayoca for comments, concerns, and inquiries through the phone numbers: 573-4661, 526-3131, loc. 4661.

The SSS-accredited PFI you have selected may affect the requirements and processing flow.

SSS loan requirements

Following are some requirements you must fulfill to apply for any SSS loan, depending on your occupation.

SSS loan requirements for employees

Members of the SSS who are employed must prepare the following:

• E-6 or an SSS digital ID.

• Two legitimate photo IDs.

• Online SSS membership.

OFW SSS loan requirements

OFWs who live outside the Philippines can apply for a loan in their current location at any SSS foreign representative office. If they cannot do so, OFWs may appoint a representative to submit their paperwork and application on their behalf in the Philippines.

Keep in mind that these supporting documents must be submitted on the application in their original copy:

• SSS ID/UMID card of an authorized representative or two legitimate picture IDs with a signature.

• OFW's SSS ID/UMID card or two legitimate picture IDs with signatures Letter of authority signed by the borrower and authorized representative.

How to repay an SSS loan debt?

SSS loans have a nominal interest rate of 10% per year and are repaid over two years in equal monthly payments. A 1% penalty could be imposed if the loan is not repaid on time. It should be noted that a person can only re-apply for a loan once the loan has been paid off for 24 months and that there may be an additional fee of ₱500 before the new loan can start.

Payroll deduction is used to receive the loan's monthly installments. Individuals working for themselves or volunteering must settle their payments at SSS offices.

Pros and cons of an SSS loan

SSS loans have their own set of benefits and drawbacks. Knowing the pros and cons of SSS loans can help you decide if they are right for you.

Pros

• An SSS loan's proceeds are not taxable as income.

• Getting access to your loan funds doesn't take long.

Cons

• The loan will have interest added to it.

• Your borrowed monetary value can be taxed if you don't pay back your loan.

Legal regulation of SSS loans in the Philippines

According to the SEC's mandate, all Filipino loans must include general conditions that outline each party's legal responsibilities. The loan security, payback schedule, interest rate, potential contract breaches, and collateral must be clear.

The Philippines' Lending Company Regulation Act of 2007 states that a lending company may grant loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor.

The Truth in Lending Act, republic act No. 3765 and the Consumer Act of the Philippines, republic act 7394 must both be complied with in order for the agreement to be valid. In collaboration with the SEC and the lending industry, the monetary board of the Bangko Sentral ng Pilipinas may set an interest rate if it is justified by the political, social, and economic climate.

The actual cost of an SSS loan

The actual cost of the social security system loan is dependent on the type of loan a member is applying for, the data supplied, and the credit history of the applicant. Below is the average cost of an SSS loan:

• Loan amount. Depending on the loan type, the maximum loan amount could be as high as ₱2,000,000 The SSS will decide whether to approve any loan amount depending on the submitted income data.

• Interest rates. Interest rates could depend on the loan type, the loan term, loan amount, etc. It could be as low as 8% and as high as 20%.

• Late payment fee. If you don't pay the whole amount by the due date, you'll be charged a penalty of 1% per month until the loan is repaid in full.

• Stamp duty. The stamp duty charge is ₱1.00 for every ₱200.00 amount.

Conclusion

One of the ways SSS gives thanks to members who make recurrent contributions is by offering a loan program. Consider using your SSS loan to meet your family's urgent requirements in the COVID-19 world.

Additionally, you can use it to pay your debts, fund a new business, or increase your savings. In any case, applying for one is now simpler. Additionally, the SSS loan processing time is much faster.