SSS Salary Loan Application: What you should know before applying

Before even applying for an SSS Salary Loan, there are things you should know and consider before applying. Don't be as ignorant as I do, I filed my loan application and got approved without reading the FAQ's and guidelines. I just got shocked when things went shaky along the way. It is always best to read and understand the provision before pushing through.

A salary loan according to SSS guidelines is a privileged given to all SSS members to meet their short term  credit needs.

Below are some of the details I got from the SSS Website, take time to read before even filing 

Who may qualify for a salary loan?

1. All currently employed, currently contributing self-employed or voluntary member.

For one-month loan, the member-borrower must have 36 posted monthly contributions, six (6) of which should be within the last twelve (12) months prior to the month of filing of application.

For two-months loan, the member-borrower must have 72 posted monthly contributions, six (6) of which should be within the last twelve (12) months prior to the month of filing of application.

2. The member-borrower whose employer must be updated in the payment of contributions.

3. The member-borrower must be under sixty five (65) years of age at the time of application.

4. The member-borrower has not been granted final benefit (total permanent disability, retirement and death).

5. The member-borrower has not been disqualified due to fraud committed against the SSS.

How much is the loanable amount?

A one-month salary loan is equivalent to the average of the member-borrower's latest posted 12 Monthly Salary Credits (MSCs), or amount applied for, whichever is lower.

A two-month salary loan is equivalent to twice the average of the member-borrower's latest posted 12 Monthly Salary Credits (MSCs), rounded to the next higher monthly salary credit, or amount applied for, whichever is lower.

The net amount of the loan shall be the difference between the approved loan amount and all outstanding balance of short-term member loans.

How long will it take the member to pay back the loan?

The one-month or two-month salary loan shall be payable in 24 monthly installment to start on the 2nd month following the date of the loan, which is due on or before the payment deadline for loans per Circular No. 2011-003.

How much is the interest charged on a salary loan?

The loan shall be charged an interest rate of 10% per annum, based on diminishing principal balance, and shall be amortized over a period of 24 months. If the loan is not fully paid at the end of the term, interest of 10% shall continue to be charged on the outstanding principal balance until fully paid.

Any excess in the amortization payment shall be applied to the outstanding principal balance.

In case a loan is not paid, how much is the delinquency interest?

Loan amortization not remitted on due date shall bear a penalty of 1% per month until fully paid.

Is there a service fee?

Yes. A service fee of 1% of the loan amount shall be charged and deducted from the proceeds of the loan.

When can a member renew a salary loan with the SSS?

The loan may be renewed after payment of at least 50% of the original principal amount and at least 50% of the term has lapsed. Proceeds of renewal loan is any amount greater than or equal to zero after the outstanding balance on the previous loan is deducted.

How does a member pay back the loan?

For employed member-borrowers, the first deduction from their salaries shall start on the second month following the date of loan. All remittances shall be made by the employer on or before the deadline for payment which depends on the 10th digit of the ER 13th digit ID number. For instance, if the ER ID number is 03-1234567-8-012, the payment deadline for member loans for the applicable month of January is February 25. Payment may be made to the SSS or any of its accredited banks.

What shall a member do if he/she transfers employment? 

(This is very important, because this is most often neglected to by the borrowers. Just like me I am not fully aware of this policy. You should take not that you have to get the updated statement of account from your HR Representative. You should also double check if the deduction from your pay slip matches your deduction from the statement of account HR will be giving you. If you don't get the statement of account your loan will incur monthly interest.)

A member-borrower who transfers employment shall submit to his new employer an updated statement of account of any outstanding loan balance with SSS and allow his employer to deduct from his salary the corresponding amortization due, including any interest or penalty for late remittance.

For self-employed or voluntary paying member-borrowers, loan amortization may be paid to the SSS or any of its accredited Banks/Bayad Centers on the prescribed schedule of payment which is according to the 10th (last) digit of the SS number of the SE/VM.

For instance, if the SS number is 01-2345678-9, the payment deadline for member loans for the applicable month of January is February 28 (last day of the month).

In case the payment deadline falls on a Saturday or Holiday, payment may be made on the next working day to avoid penalties on late member loan payments of employers, self-employed and voluntary members including OFWs.

What are the obligations of the employer to the SSS?

The employer shall be responsible for the collection and remittance to the SSS of the amortization due on the member-borrower's salary loan through payroll deduction.

The employer shall require new employees to secure from the SSS an updated statement of account.

The employer shall deduct and remit to SSS any outstanding loan balance of new employees.

In case of transfer, separation, or resignation, how can a borrower pay back the loan?

(This is also very important to note. In case, by any chance you resign, separate, transfer the company will deduct all remaining loans from your back pay. This will apply to special cases like merger and acquisition. Though merger and acquisition is not the employees fault the said ruling will still apply. Yeah too bad.)

In case a member-borrower is separated voluntarily (e.g. retirement or resignation) or involuntarily (e.g. termination of employment or cessation of operations of the company), the employer should deduct the total balance of the loan from any benefit/s due to the employee and shall remit in full to SSS.

If the benefit/s due the employee or the amount thereof legally available for offset of obligations of the employee is insufficient to fully repay the loan, the employer should report to the SSS the effective date of separation from the company and the unpaid loan balance of the employee

What are the obligations of the employer to the SSS?

In case of default, the arrearages/unpaid loan shall be deducted from the benefits claimed by the member, whichever comes first, as follows:

1. For self-employed/voluntary member, deduction shall be from short-term benefits (Sickness/Maternity/Partial Disability).

2. In case of member-borrower's death, total disability or retirement, the total outstanding balance of the loan including the interest and penalty, shall be deducted from the corresponding benefit.

What are the other conditions of the loan?

1. Any overpayment on a previous loan shall be applied to the subsequent loan, if any, otherwise the overpayment shall be refunded upon request of the member-borrower.

2. The borrower shall notify the SSS in case of change of address/employer thru mail/e- mail/over-the-counter (OTC). The notice should indicate the name and SS number of the member-borrower, addressed to the Member Services Section of the nearest SSS Branch, and duly signed by the member-borrower (in case of mail/OTC).

NOTE: A disclosure statement on loan transaction is issued by the SSS to the borrower upon approval of his loan (R.A. 3765, Truth in Lending Act)

What are the papers/documents needed for filing a salary loan? REQUIREMENTS!!!!!

A member-borrower shall submit an accomplished Member Loan Application and present Social Security Card (SS card) or in its absence, Application for SS card (SS Form E-6) acknowledgment stub and any two valid IDs listed below both with signature and at least one with photo:

• Unexpired Driver's License

• Professional Regulation Commission (PRC) ID card

• Passport

• Postal ID

• School or Company ID

• Tax Identification Number (TIN) card

• Seaman's Book

• membership card issued by private companies

• Overseas Worker Welfare Administration card

• Senior Citizens card

• Voter's Identification card/Affidavit/Certificate of Registration

• ATM card

- with cardholder's name; or

- with certification from bank, if without name

• Credit card 

• Fisherman's card issued by BFAR

• GSIS card/Member's Record/Certificate of Membership

• Health or Medical card 

• ID card issued by LGUs (e.g. Barangay/Municipal/City)

• ID card issued by professional association recognized by PRC

• Birth Certificate

• Baptismal Certificate

• Marriage Contract

• NBI Clearance

• Pag-IBIG Member's Data Form

• Permit to carry firearms issued by the Firearms and Explosive Unit of PNP

• PHIC Member's Data Record

• Police Clearance

• Seafarer's Registration Certificate issued by POEA

• Temporary Driver's License issued by LTO

• Transcript of Records

• Alien Certificate of Registration

• Bank Account Passbook

• Certificate from:

-Office of Southern/Northern Cultural Communities; or

-Office of Muslim Affairs

• certificate of Licensure/Qualification Documents/Seafarer's ID and Record Book from Maritime Industry

• Certificate of Naturalization from the Bureau of Immigration

• Life Insurance Policy

• Birth/Baptismal certificate of child/ren

If filed by member-borrower's Authorized Representative, Member Loan Application, Authorized Representative's SS card or any two valid IDs both with signature and at least one with photo, Letter of Authority (LOA) signed by both the member-borrower and member-borrower's authorized representative, and member-borrower's SS card or any two valid IDs both with signature and at least one with photo.

If filed by Employer/Company's Authorized Representative, accomplished Member Loan Application, Authorized Company Representative (ACR) card issued by SSS, LOA from employer and any two (2) valid IDs both with signature and at least one with photo, member-borrower's SS card or in its absence, Application for SS card (SS Form E-6) acknowledgment stub and any two valid Ids both with signature and at least one with photo.

If filed by member's representative, present member's SS card or two (2) valid IDs, one of which with photo and signature, authorization letter signed both by the member and representative.

Where can a borrower file the salary loan application?

A borrower may file the salary loan application at the branch nearest the place of residence or business. A member who is registered at My.SSS can submit the salary loan application online. The salary loan submitted online by an employed member will be directed to the employer's My.SSS account for certification, hence, the employer should also have an SSS Web account.

OFW members may also file their salary loan application at the SS Representative Offices in selected countries. In case there is no SSS office in a particular country they may send their application and supporting documents to their relatives here in the Philippines and authorize them to file at the SSS branch. Documents issued in other country should be duly authenticated or certified by the Philippine Consulate/Embassy. They may also send the application and supporting documents to Foreign Branch Expansion and Monitoring Department thru mail (3/F SSS Building, East Avenue, Diliman, Quezon City) or fax (632-435-9814).

Note: The employer shall submit an updated Specimen Signature Card (SS Form L-501) to be updated annually to avoid delay in the processing of salary loan applications.

Now your turn to decide if you push through with your salary loan application at SSS. If you are not resigning for the next 2 years from your current company then there'd be no problem go for it. But if you think that you are uncertain like you smell a merger and acquisition then don't or you'll end up going home empty handed. Please note that all lavender fonts are my personal thoughts.

Check out SSS Website for more details.

Also check my other Website