SSS microloan targets predatory lending

The Social Security System’s (SSS) upcoming microloan program will help combat modern-day predatory lending practices while providing additional assistance to its members, according to Finance Secretary Frederick Go.

Speaking at a press conference at the SSS headquarters in Quezon City, Go said the state pension fund’s recent financial performance—including record highs in its P1 trillion reserve level and P142.97 billion net income—has provided the headroom needed for additional initiatives to assist its members.

“The microloan is really our answer to the predatory lending that a lot of our fellow Filipinos suffer from,” he said.

“The strong performance of SSS allows SSS to come up with programs like this, like this microloan. If we have a strong balance sheet, if we have a strong fund, we can really help our members,” he added in Filipino.

Go, who also serves as chair of the Social Security Commission, said the genesis of the microloan program came in response to “payday loans” with exorbitant interest rates of as much as 15 percent per month.

“When I came in as Secretary of Finance, I found out that there is a type of loan that is very popular now. That is what they call a payday loan or microloan. This means that this is the type of loan where you will be in debt now and pay when your salary comes. So these are short-term loans, just 30 days. And I found out that its interest rate is 15% a month,” Go said.

In response, Go said the SSS microloan program will feature an interest rate of 8 percent per year, or about 0.67 percent per month, placing it competitively in the local microloan market.

Most bank personal loans in the Philippines advertise monthly add-on interest rates of roughly 0.6%–1.5% per month from major banks such as HSBC, BDO Unibank, RCBC, and Metrobank. In effective annual terms, these commonly reach around 10%–20% or more per year, depending on the borrower’s credit profile and loan structure.

Microfinance options that are easier to access—such as programs run through the Small Business Corporation (Philippines) P3 initiative or private microfinance institutions—typically charge about 2%–2.5% per month, and sometimes significantly more through pawnshop-type lending.

The Government Service Insurance System has introduced a microloan facility at 6 to 7 percent per annum under its “Ginhawa Go” initiative. The SSS’ 8 percent annual interest rate for its forthcoming microloan program places it competitively within the local lending market while providing affordable financial assistance to its 44 million members.

Go noted that the SSS has also secured partnerships with several banks. While the banks involved cannot yet be disclosed, he said the partnerships will help streamline the application process for the microloan program.

“We've already signed up five banks. So what we're trying to do is we want to make life easier for the people. We want to make life easier for every ordinary person,” he said.

SSS President and CEO Robert Joseph de Claro added that the program will also be accessible online through the mobile applications of partner banks. He said the microloan program is targeted for rollout in the second quarter of 2026.

“You can go to the branch and you can avail of it through the mobile app. So you'll have more reach in terms of the members of the SSS that are qualified to get this loan,” he said.