UnionDigital Bank microloan program with SSS to roll out this year

UnionDigital Bank, Inc. (UD), a subsidiary of UnionBank of the Philippines, is set to launch its microloan program with the Social Security System (SSS) this year, with micro, small, and medium enterprises (MSMEs) able to apply for capital, according to a UD official on Friday.

“(As for the) target date, I can’t really say yet. All I can say is it’s coming soon. Very, very soon… within the year,” Kimberly Dy-Tenchavez, head of brand and communications for UD, told reporters during the Hapinoy Caravan.

SSS LoanLite, officially introduced last September, is a micro-lending program for eligible SSS members that offers loan amounts between P1,000 and P20,000. Its repayment terms range from 15 to 90 days.

The program seeks to give members an accessible and convenient way to access lending, as the application and loan disbursement process is fully digitalized and will be available through the UnionDigital banking app. Funds may also be disbursed through the MySSS Card.

“The approval for that will go through the usual approval process handled by SSS and also UD,” Ms. Tenchavez said.

SSS LoanLite carries an 8% interest rate per annum and a service fee, according to the SSS website.

The upcoming launch of the micro-lending program is one of UD’s responses to the persistent challenge of MSMEs in gaining access to capital, Ms. Tenchavez said.

Access to capital remains one of the most glaring challenges faced by MSMEs, especially sundry shops, locally called sari-sari stores, said Mark Joaquin Ruiz, president and co-founder of Hapinoy, a nationwide grassroots community network of over 70,000 micro entrepreneurs, the majority of whom are sundry shop owners.

“If you ask what a sundry shop real concern is… it’s really capital,” Mr. Ruiz told BusinessWorld during the caravan.

“Because right now, many still rely on 5-6, which has extremely high interest rates,” he said, noting that the SSS LoanLite program is a game changer for MSMEs.

MSME loans accounted for only 4.73% of the banking system’s P12.143-trillion loan portfolio, net of exclusions, as of March, according to the Bangko Sentral ng Pilipinas.

This was below the 10% lending allocation previously required under the Magna Carta for MSMEs, which mandated banks to set aside 8% of their loan portfolio for micro and small enterprises and 2% for medium-sized businesses. The mandatory credit allocation expired in June 2018 and has yet to be reinstated.

Apart from the upcoming SSS LoanLite program, UD is also working with Hapinoy to launch a loan product that will be rolled out much later, Ms. Tenchavez said.

The recent Hapinoy Caravan, held in Novaliches, Quezon City, was a collaboration between Hapinoy and UD that helped nearly 300 sundry store owners become more financially and digitally literate. — Edg Adrian A. Eva