Bugasong Multi-purpose Cooperative

CREDIT POLICY

Article I
Section 1. GENERAL CREDIT POLICY STATEMENT
The cooperative, in enhancing the values of equality, equity and mutual self-help, seeks to
promote the concept of human development and unity by working together to achieve a better quality
of life for the members and their families.

The cooperative’s mission is to increase the income and purchasing power of the cooperative
members, pool their resources by encouraging savings and promoting thrift to stimulate capital build-
up for economic development activities, and to extend credit services to the members.

This policy provides guidelines governing the various loan products of the Cooperative. The
policy is aimed at securing members’ investments in the Cooperative.

Section 2. LENDING PRACTICE

The cooperative shall deliver effective and sustainable financial
services to its members with the end view of developing the socio-economic
condition of the community in general. The lending practice of Bugasong MPC is
capacity – based. It is a non-traditional lending practice in the credit cooperative that gives loans
based on the capacity of the members to pay.
To ensure this, the cooperative shall subscribe to the following guiding
principles
1. The security of the cooperative is more important than the applied or requested credit
needs of any individual member.
2. To answer the needs of a borrower-member, the cooperative needs to evaluate the risk
involved in lending and set the limit that the cooperative is willing to assume or grant.
3. Loans are granted to members based on good standing and capability of the member to
repay.
4. Each loan necessitates a thorough credit investigation.
5. The protection of savings deposits and share capital of all members and the credibility
and security of the cooperative are more important than the increase in the volume of
transactions and operations, and/or growth of assets.
6. A loan to members is a privilege, rather than a right inherent to membership.
7. No new loans shall be extended to member-borrowers with delinquent accounts.
8. The cooperative must prove its financial soundness, operational security and ensure
balance between risks, diversification, and profitability.
9. To limit the risk of lending and to diversify the loan portfolio, the cooperative must limit
loans to members who are within the geographical area stated in the by-laws.
10. The loan portfolio is limited by type of loan.
11. Commercial, real estate, and agricultural loans must be covered sufficiently by collateral.
The cooperative may finance viable projects up to 70% only of the total project cost. The
remaining 30% shall constitute the proponent’s counterpart.
12. Loans granted below or equal to the share capital only shall be charged an interest of 1%
per month based on diminishing balance and fines of 2% in case of default.
13. The Cooperative shall adopt capacity-based lending wherein any loan shall be granted
based on a thorough evaluation of the 5 C’s of the applicant, to wit:
 i. Character
 A determination of character involves the development of information relating to
the applicant's credit history. This may be obtained from the community, Credit
Information Corporation (CIC) and other private and government institutions.

ii. Capacity
 In determining an applicant's capacity to pay, the credit committee or loan
officer should carefully examine the applicant's net income, outstanding debts,
debt payments, and living expenses. After debt payments and living expenses
are considered, the applicant's income should be adequate to repay the loan in
accordance with the agreed upon terms.

iii. Capital
 This refers to the regular, consistent amount of savings or contributions made by
the member-borrower (or his/her co-borrower) in the cooperative and other
Institutions, which leads to the build-up of financial, material resources.
- Savings and time deposit made as collateral on loans are
non-withdrawable until loan is fully paid.
iv. Collateral
 A cooperative may grant unsecured and secured loans. Unsecured loans are
consumer-type loans, usually relatively small, traditionally offered for various
purposes incidental to the members' needs. Secured loans are extended credit
with a security interest in personal or real property of tangible value. The
security may also be an endorsement by another person or entity, such as a
security cover, to ensure payment if the borrower fails to do so. Co-maker loans,
deposit hold-outs, and automobile loans are common types of secured loans.
Other types of secured loans are home equity loans and real estate loans.

v. Conditions
 These refer to the type of activity to be financed, the market for such activity,
and the viability of the project to be financed among other things. It also refers
to external factors that affect the socio-economic circumstances of the loan
applicant. These factors are:
- Legality of the proposed project
- Environmental soundness of the project
- Appropriateness of the business in relation to the climatic
conditions.

Article II
Section 1. CREDIT OPERATIONS

A. Eligibility Criteria

The main objective of the Cooperative is to provide benefits to its members. Hence, the loan products
are specifically targeted to the needs of its members. However, to safeguard member’s investments in the
Cooperative, the following criteria shall be met:

1. The borrower must be a bona fide Regular Member of the Cooperative.

2. The borrower has fully paid the Minimum Share Capital of Five Hundred Pesos (Php500.00) for
Membership Fee of ________________________.
 3. The borrower has no past due loan payments.
4. The borrower has actively contributed to share capital build-up.

B. Loan Entitlement
1. Regular Members may avail at multiple loan products for as long as they meet the following
requirements:
i. No past due balances.
ii. Their Share Capital Buil-up is active for the past three (3) months.
iii. The total monthly amortization of both loans will comply with any take home-pay
policy of member’s employer.
iv. All members are entitled to receive patronage refund from interest payments of their
loans.
v. Tenure, Co-maker, and Share Capital requirements must be met as defined in Article
________________.
C. Loan Products
1. Loan Purpose. The Cooperative’s loan products are designed to meet the member’s financial
requirements while also safeguarding their investments. Thus, Co-makers are required on
certain loans as follows:

Loan Amount Co-makers Needed

Up to 5,000.00 0

5,001.00 to 25,000.00 1 (minimum - based

on the loan amount
and share capital
being co-maked)

25,0001 and up 2 (minimum - based

on the loan amount
and share capital
being co-maked)

Note: There will be no Co-Makers needed if total loans (new + outstanding)

are less than or equal to Share Capital of the Member-Borrower.

2. Loan Terms. The Cooperative’s loan products differ from those offered in the market. They
are not available from traditional banking sources, they do not entail expensive credit
investigation, and they are processed quickly. Moreover, borrowers earn patronage refunds
from their loan interest payments which effectively lowers the Coop’s interest rates further.

3. Loan Products and Transaction Guidelines

a. Regular Loan – Loans offered to members for business and personal needs.

i. Eligibility to Borrow
 Regular member.
 Non delinquent on his/her other existing loans

ii. Loanable Amount and Loan Limit

 The Loan Officer shall determine the amount based on the 5C’s and the credit
worthiness of a borrower but shall not to exceed five-times (5x) of his or her
 share capital. Loan amount above the share capital shall secure co-maker and
subject to a maximum of 1% of the coop’s total SC and reserves as per coop’s
by-laws.

 Where total deductions from availed loan windows exceed 2/3 or approximately
67% of a member’s basic salary or total balance of source of income, the loan
shall be reduced accordingly.

iii. Term and Mode of Payment

 Term of the loan shall be determined by the Loan Officer based on the
reasonable cash flow of the borrower but shall not exceed 60 months.
Collateralized loans either real or chattel property, term shall not exceed the
useful life of the collateral whichever is shorter.
 Payment shall be monthly according to the required repayment schedule.

iv. Interest and Other Charges

 A service fee of 2.5% of the amount granted shall be deducted from the loan
proceeds.
 Insurance fee shall be deducted from the loan proceeds if loan is over Five
Thousand Pesos (Php5,000.00) otherwise, the borrower has the option to insure
his/ her loan.
 Interest of 1% if loan is equal or below share capital and 1.4% per month if loan
is over share capital based on diminishing balance.
 Penalty of 2% of the amount in default will be charged for failure to pay the
amortization after the 5-working day grace period.

v. Loan Security
The amount of loan shall be fully secured by pledges of co-maker(s), real
estate mortgage, chattel mortgage, deposits, postdated checks, or a combination of
the aforementioned whichever is applicable and acceptable to the cooperative.
However, in case of loan secured by pledges of co-maker(s), such loan shall
not be allowed unless share capital deposit of the borrower is 50% or more of the
loan amount.

vi. Valuation of Collateral

Loans secured by real estate mortgage must not exceed seventy percent
(70%) of the appraised value of the real estate property. While the valuation for the
land improvements and building shall not be more than 70% of the appraised value
less depreciation.
vii. Loan Renewal
The borrower may apply for loan renewal after paying anytime upon the
option of the member borrower provided that the loan balance shall be deducted from
the renewed loan.
b. Special Loan - Loan extended to non-delinquent Members to meet their emergency
needs.

i. Eligibility to Borrow
 Regular member for at least one (1) year who is non-delinquent member may
avail of the Special Loan notwithstanding his/her existing/outstanding loan.
  Special Loan may be availed due to circumstances of emergency in nature that
the manager may consider:
 Hospitalization due to sickness or accident of the member or any immediate
family member.
Single member – parents, single brothers and sisters

Single parent – children, parents

Married member – spouse and single children

 Financial loss due to natural or man-made calamities; and

 Other circumstances of emergency in nature that the Manager may consider.
 The borrower must present proof/evidence of the circumstances.

ii. Loanable Amount and Loan Limit

 The loanable amount for Diamond/Gold/Silver members will not exceed Two
Hundred Thousand (Php200,000.00) pesos.
 The loan limit for members entitled to vote will be 100% of the share capital.

iii. Term and Mode of Payment

 Term shall not exceed four (4) months.

iv. Interest and Other Charges

 Interest is 2% per month based on diminishing balance.
 Service fee of 2% of the amount granted.
 Penalty of 2% of the amount in default for late payment of amortization shall be
charged.
 The Manager/Loan Officer is authorized to act on all Special Loan applications,
except in cases of related interest.

c. Salary Loan - Loan extended to members who are permanent employees and whose
employer through its authorized representative has entered into a Memorandum of
Agreement with the Cooperative. However, co-terminus which their employment is
attach to the term of their elected head of office will be granted with salary loan based on
the latter’s term of office.

i. Eligibility to Borrow
 Regular member.
 Non-delinquent on his/her other existing loans

ii. Loanable Amount, Term and Schedule of Payment

 All members/borrowers need to comply with the following tenure requirement
which is dependent on the amount of loan.
Loan Amount Tenure Requirement Term of Payment

Up to P25,000 3 months Up to 12 months

P25,001 to P50,000 6 months Up to 24 months

P50,001 to P75,000 9 months Up to 36 months

P75,001 to P100,000 12 months Up to 48 months

P100,001 to P150,000 24 months

P150,001 to P200,000 36 months Up to 60 months

 Note: Any exception to the above will need Board approval.
 Schedule of payment shall be monthly.
 When the 2/3 rule was exhausted, the loan shall be reduced accordingly.

iii. Interest and Other Charges

 A service fee of 3% of the amount granted and shall be deducted from the loan
proceeds.
 Interest rate is 1% straight per month for the first 12 consecutive repayments of
principal and interest. Thereafter, interest rate of 1% straight per month shall be
collected based on the annual diminished balance after 12 months or equivalent 1
year repayment. The scheme shall be applied on the consecutive years until loan
is fully paid.
 Penalty of 2% of the amount in default will be charged for failure to pay the
amortization after a 5-working day grace period.
 Filing Fee of Fifty Pesos (Php50.00) for every applicant.

iv. Loan renewal

 The borrower may apply for loan renewal anytime upon the option of the
member-borrower, provided that the loan balance shall be deducted from the
renewed loan.
 Special Power of Attorney (SPA) should be submitted for every renewal on
Salary Loan regardless of the amount applied for. SPA template shall be uniform
in all branches.

d. Bonus Loan - Loan granted to all regular government and private employees.
i. Eligibility to Borrow
 Must be a coop member.
 Requirements:
a. Photocopy of the certified latest pay slip.
b. Loan note duly signed by the Head of office or District Supervisor and
Disbursing Officer.
c. Special Power of Attorney
 Can be availed upon full payment of the previous Bonus Loan (Mid-Year
Bonus and Year-end Bonus).
ii. Fees to be collected:
 Service fee- 2%
 Filing fee – Php20.00
 Prepaid Interest – 2% per month
 Corresponding insurance

e. Honorarium Loan – Loan extended to members who are barangay officials and
regularly receiving monthly honoraria.
i. Eligibility to borrow
 Regular member.
 Non-delinquent on his/her other existing loans.
 Legitimate barangay official certified by the Barangay Captain and Local
Government Operations Officer of the municipality.
  Sangguniang Kabataan Officials can avail loan when he/she reaches the
legal age of 18.
ii. Interest and Other Charges
 The monthly loan amortization of the loan amount shall not exceed 70% of
the honorarium received per month.
 The borrowers shall be organized into group of at least 3 who shall
guarantee each other’s loan.
 Individual borrower may be granted with adequate co-makers who will
guarantee the loan.
 Interest of 2% per month based on diminishing balance shall be charged.
 Service fee of 2% of the amount granted shall be charged.
 Penalty of 2% of the amount in default shall be charged for failure on due
date.
 Mode of payment shall be monthly or at the time of release of honoraria.
 Term: Three (3) months less than his/her term of office

f. Appliance Loan– Loan extended to members who wish to avail gadgets, appliances and
furniture.

i. Eligibility to Borrow
 Regular Member and has updated account on other loan windows.
ii. Loanable Amount and Term of Payment
 Loan Amount: Actual Price of the Appliance but not to exceed
Php25,000.00
 Term: Maximum of 24 months
iii. Interest Amount and Other Charges
 Interest Rate of 2% per month
 Fees to be collected:
a. Loan retention – 5%
b. Service fee – 2%
c. Filing fee – Php20.00
d. Corresponding Insurance

g. Pension Loan– Loan extended to all pensioner members.

i. Eligibility to Borrow
 Regular Member and has updated account on other loan windows.
ii. Loanable Amount and Term of Payment
 Loan Amount: Monthly loan amortization of loan amount shall not exceed
80% of his/ her monthly pension.
 Interest Rate: 2% per month based on the diminishing loan balance
 Term: Maximum of 24 months
iii. Interest Amount and Other Charges
 Fees to be collected:
a. Loan retention – 5%
b. Service fee – 2%
c. Filing fee – Php 20.00
h. Petty Cash Loan
 Guidelines:
a. Applicant must be a METV
b. Amount of Loan: P1,000.00 to P5,000.00
c. Term of Payment: Payable within three (3) months
d. Service Fee: 2%
 e. Interest: 2% per month based on the principal amount (diminishing
loan balance)
f. Penalty: 3% of the monthly amortization due every month. Failure
to settle first the amount due will disqualify the member from
borrowing in other lending windows in the future.

Birthday Loan Table

Tenure Loan Entitlement Payment Term Co-Makers Needed
6 Months P10,000.00 6 Months 0
9 Months P15,000.00 6 Months 0
12 Months P20,000.00 12 Months 0
24 Months above P25,000.00 12 Months 0
Notes: A member may avail of multiple loans but only two (2) outstanding loan allowed for Petty Cash and
Birthday Loan.
i. Car Loan
Who Can Avail:
1) Regular member 70 years old upon loan maturity.
2) For employed, at least two (2) years as permanent/regular employee.
To submit:
 Certificate of Employment from HR.
 Certified copy of appointment.
 Certified copy of two (2) valid IDs.
3) For business owners, at least two (2) profitable years of operation.
To submit:
 Certified copy of Financial Statement
 Certified copy of ITR stamped received by BIR.
 Certified copy of two (2) valid IDs.
4) Monthly net disposable income should be higher than the loan amortization.
5) No delinquent loans in Bugasong MPC.
6) Pre-owned vehicle must not be more than five (5) years from the date of original
purchase.
Loanable Amount:
 Up to 80% of the unit price for Brand New.
 Up to 65% of the appraised value of Pre-owned/Surplus.
Loan Term:
 Up to 60 months for Brand New
  Up to 36 months for Pre-Owned/Surplus
Loan Interest:
 Brand New – 0.90% per month or 10.80% per annum
 Pre-Owned/Surplus – 0.95% per month or 11.40% per annum
How to Apply:
1. Secure quotation of your chosen car from your preferred Car Dealer.
2. Submit quotation signed by the Manager or Authorized Representative to
Bugasong MPC Loans Section for computation.
3. Submit Application Form.
4. Loan verification and approval in a minimum of seven (7) calendar days. Level
of Approval Authority will apply based on loan amount.
5. Loan release and purchase of the vehicle to the Car Dealer.
Other Details/Conditions
 No renewal of loan until fully paid
 Car insurance shall be updated and shouldered by the borrower.
 Original copy of Certificate of Registration (CR) shall be in the custody of
Bugasong MPC until loan is fully paid with annotation of encumbrance from
Registry of Deeds.
 Policy on collection and delinquency shall be similar with other loan
windows.
 Co-maker shall be at least related to the maker on 3 rd degree of
consanguinity or affinity and no delinquent accounts with Bugasong MPC.
j. Coop Auxiliary Loan (CoAL).
CoAL Features

 Any loanable amount as long as the borrower has the capacity to pay after
considering all deductions/amortizations of all existing loans.
 Up to thirty-six (36) months term of payment with co-maker
 Applicable interest rate per month is the same with the mother loan in the
respective loan window, such as:
o Salary - 1%
o Pension - 2%
o Honorarium - 2%
 Collection of interest payment per month is based on diminishing balance.
 Fees to be collected:
Service fee- 2%
 Loan Retention – 2%
 MSF/MSF-EF – 3%
 Filing fee – Php 20.00
 Corresponding insurance
Who Can Apply For a CoAL?

 Regular employed member.

 With existing and current Salary, Honorarium or Pension Loan.
 No delinquent accounts in all loan windows.
 With sufficient net monthly income to pay the loan amount after considering all
deductions/amortizations of all existing loans.
 Not more than 70 years old upon maturity of loan.
 What are the CoAL Requirements?

 Copy of Valid ID.

 Payslip/Payroll/Proof of Active account for Pensioner
 Certified SOA (Bugasong MPC).
 No derogatory record in the cooperative.

How to Apply for CoAL

1. Get loan application form.

2. Fill-out out the information needed in the loan application.
3. Submit application form to the Loan Officer for verification and approval.
4. Loan release.

Other Details

 Renewable
 In case of non-payment after the agreed term, regular collection procedure for
demandable accounts will be conducted.

k. Coop Express Loan Window

Coop Express Loan Features

 ₱5,000.00 - ₱30,000.00 loanable amount.

 Up to three (3) months term of payment
 Without co-maker if loan amount is within share capital level with an interest rate of
1% per month.
 With co-maker if loan amount is over share capital level at interest rate of 1.4% per
month.
 Collection of interest payment is based on diminishing balance.
 Fees to be collected:
 Service fee- 2%
 Loan Retention – 2%
 MSF/MSF-EF – 3%
 Filing fee – Php 20.00
 Corresponding insurance

Who Can Apply for Coop Express Loan?

 Regular member.
 Employed with at least six months of permanent tenure or self-employed with
proof of paid billing for the past 3 months. Account Name indicated in the
billing is of either husband or wife.
 No delinquent accounts in all loan windows.
 For employed, with sufficient net monthly income to pay the loan amount
after considering all deductions/amortizations of all existing loans.
 For self-employed, declared monthly income is sufficient to pay monthly
loan amortization/ loan amount until fully paid.
 Not more than 70 years old upon maturity of loan.
What are the Coop Express Loan Requirements?
  Copy of Valid ID.
 Certified SOA (Bugasong MPC).
 No derogatory record in the cooperative.

How to Apply for Coop Express Loan

1. Get loan application form.

2. Fill-out out the information needed in the loan application.
3. Submit application form to the Loan Officer for verification and approval.
4. Loan release.

Other Details

 No renewal of loan until fully paid.

 In case of non-payment after the agreed term, regular collection
procedure for demandable accounts will be conducted.

Cash Allowance Loan (CAL) window (for DepEd teaching personnel only).

CAL Features


₱5,000.00 - ₱10,000.00 loanable amount.

Maximum of one (1) year term of payment

With co-maker at interest rate of 2% per month.

Fees to be collected:
 Service fee- 2%
 Filing fee – Php 20.00
 Prepaid Interest – 2% per month
Who Can Apply For a CAL?

 Regular DepEd teaching employee.

 No delinquent accounts in all loan windows.
 Not more than 65 years old upon maturity of loan.

What are the CAL Requirements?

 Copy of Valid ID.

 Payslip/Payroll
 Certified SOA (Bugasong MPC).
 No derogatory record in the cooperative

How to Apply for CAL?

 Get loan application form.

 Fill-out out the information needed in the loan application.
  Submit application form to the Loan Officer for verification and approval.
 Loan release.

Other Condition:

Interest refund in case of early termination of loan.

j. Interest Free Motorcycle Loan for Employees of Bugasong MPC

FEATURES AND DESCRIPTION

1. Employees eligible to avail motorcycle loan.

 Must be a Member Entitled to Vote.
 No default payment in their existing loans.
 Have Php3,000.00 net take home pay after deducting all monthly loan due.

2. Loan features.
 Maximum loanable amount Php100,000.00.
 Interest free loan.
 Payable up to 36 months.
 Required co-maker: co-employee eligible also to avail motorcycle loan.
 Automatic payroll deduction.
 Secured by an insurance to be shouldered by the employee

3. Additional features.
 Registration and other incidental expenses upon purchase of a motorcycle shall be
shouldered by the applicant employee. Given that the motorcycle will be registered to
his/her name.
 Care of the motorcycle is the employee’s complete responsibility, hence it is strongly
advised that the employee obtains insurance for the motorcycle. If the motorcycle is stolen
lost or damage for whatever reason during the period of the loan, the loan must still be
repaid in full to the Bugasong MPC.
 Maintenance and other expenses in order to bring the motorcycle into good form shall be
shouldered by the applicant employee.
 If the employee leaves the employment at the Bugasong MPC at any time before the whole
loan has been repaid, the balance of the loan will immediately become repayable from the
employee’s final salary and benefits. Note that if the balance of the outstanding loan is
larger than the employee’s final salary and benefits, the individual will be required to
repay the total outstanding loan balance before their last date of employment at the
Bugasong MPC. If the employee has no capacity to repay the total outstanding loan
balance, the BMPC has the right to hold the motorcycle at the BMPC office until such loan
has been repaid in full with 1.4% interest diminishing monthly.

D. Credit Evaluation
a) Loan Portfolio
The Loans Division shall implement proper labelling of member’s loan portfolio as follows:
a) Member Credit Rating Category
A+ (A Plus) - Borrowers who have paid monthly amortization (principal and
interest) in advance, updated on time.
A - Borrowers who have paid up-to-date monthly amortization
(principal and interest).
 B - Borrowers with arrears but can pay/ have paid amount defaulted
(which includes principal, interest, fines) within the year.
C - Borrowers paying loan but amount is lacking based on monthly
amortization and must/ need to see the Branch Manager if allowed
to renew loan.
D - Borrowers who are not paying their loan.

b) Utilization of the Credit Rating

It will serve as easy access for the Loan Officers during loan assessment. Members with
Ratings A+, A, and B will fall under Simple Loan transaction which will be accommodated faster
by the Loan Officers. Those who are categorized with C and D ratings will be served by the
Branch Manager.

c) Color Coding per Rating Category

1) A+ - GOLD
2) A – ORANGE
3) B – RED
4) C – BLUE
5) D – VIOLET
d) Period of Rating

Annual (January – December); Preceding year’s rating will be used in the current year. In
case of defaulted amount or indication of non-payment, BM will assess and approve the loan.

2. Loan Evaluation Procedure

i. The loan application with complete attachments of required documents shall submit to
the loan officer for checking and submission to the manager for approval.
ii. Conduct CI
iii. The loan application signed by the loan officer and approved by the manager will be
forwarded to the Loan Processor for preparation of disbursement voucher.
iv. Loans that pass the screening of the Loan Officer but are beyond their approval should be
endorsed to the following levels of approval authority for further action:
 Board of Directors – 1 million and above.
 CEO – below Php1,000,000.00
 Branch Manager – Php500,000.00 and below
 Loan Officer – Php300,000.00 and below

1. Credit Evaluation which shall include the basis in granting loan and credit investigation;
2. Effective loan collection and monitoring policies designed with the following characteristics:
a. Monthly and accurate reporting of delinquent loan to the board;
b. Timely and consistent follow-up actions;
c. Utilization of outside collection sources when intemal efforts fail to produce results; and
d. Maintenance of collection records.;
 3. Loans of Directors, Officers, Staff and their Related Interests (DOSRI); and
4. All loans shall be covered by insurance or Loan Protection Plan.

Birthday Loan Table

HPPEMC Tenure Loan Entitlement Payment Term Co-Makers Needed
6 Months P10,000.00 6 Months 0
9 Months P15,000.00 6 Months 0
12 Months P20,000.00 12 Months 0
24 Months P25,000.00 12 Months 0
Notes: A member may avail of multiple loans but subject to the following conditions:

 Only one (1) outstanding loan allowed for Petty Cash and Birthday Loan.
 The total outstanding balance of all loans does not exceed P200,000.00 except when fully secured by
Share Capital.

Section 3. Tenure Requirement. All members/borrowers need to comply with the following HPPEMC tenure
requirement which is dependent on the amount of loan.
Loan Amount HPPEMC Tenure Requirement
Up to P25,000 3 months
P25,001 to P50,000 6 months
P50,001 to P75,000 9 months
P75,001 to P100,000 12 months
P100,001 to P150,000 24 months
P150,001 to P200,000 36 months
Note: Any exception to the above will need HPPEMC Board approval.
Section 4. Interest Rates. The Cooperative’s loan products must be patterned after market rates. This is to
ensure the economic viability of the Cooperative. However, these loan products cannot be offered in the formal
financial markets because they would be too expensive for these financial institutions to handle. But since the
law mandates that annual net surplus of the Cooperative be returned to members in the form of dividends and
patronage refunds, this effectively lowers the interest rates. This way, members get the benefit both by being
the owners as well as the borrowers of the Cooperative.
Terms, Rates and Conditions are subject to change without notice in the sole discretion of the Cooperative
Board of Directors. All amendments to these Terms, Rates and Conditions will be shared to the members
through any of the digital communications channel available – email, website, social or media.
Section 5. Interest Rate Discount. To recognize members who have remained in good standing with the
Cooperative, a special interest rate discount is given to them based on their Membership Level*.
Membership Level Interest Rate Discount**
Silver Member 0%
Gold Member 1%
Platinum Member 2%
*Membership Level

 Silver Member – a Member in Good Standing (MIGS) for 0 to <3 years.

 Gold Member – MIGS for 3 to <5 years with continuous patronage of the Cooperative’s loan
products.
 Platinum Member – MIGS for at least 5 years with continuous patronage of the Cooperative’s loan
products.

**Except for interest-free loans.

Section 6. Retention Fund. As part of the Cooperative’s policy on capital build-up, most of the loans
borrowed from the Cooperative require a 10% Retention Fund. This means that the borrower will have to add
the equivalent of 10% of the loan into his Share Capital Contribution, payable in equal payments throughout
the duration of the loan.
Section 7. Information Security. As the Cooperative is a separate entity from the member’s employer, no
employer confidential information including, but not limited to, compensation, capacity to pay, etc., will be
shared between employer and the Cooperative. The Cooperative is taking all the risk in giving out loans to its
members. As such, to safeguard members’ equity, the Cooperative will require co-makers for its loan products.
Co-makers are jointly liable with the Maker (Borrower) of the loan. In case of non-payment of the Maker, the
Cooperative may go against the Co-maker to collect payment.
Section 8. Documentation. In addition to the submission of a Loan Application Form, some of the
Cooperative’s loan products require additional documentation. This is to ensure responsible use of the
Cooperative’s credit facility.
Loan Type Documentation Required
Emergency Loan Proof of calamity, death, other fortuitous events
Educational Loan School’s billing statement or official receipt
Hospitalization Loan Hospital’s billing statement or official receipt
Appliance Loan Quotation or official receipt of appliance
Motorcycle Loan Quotation or official receipt of motorcycle
Wedding Loan Quotation or official receipt of wedding expenses
Travel Loan Quotation or official receipt of travel package
Multipurpose Loan Letter of intent stating purpose of loan
Housing Equity Loan Contract to sell, quotation, or official receipts
Car Equity Loan Quotation or official receipt of car
Business Loan Business Permit, Business Plan, FS for last 2 years, Collateral
Real Estate Loan Refer to Real Estate Loan Policy
Section 9. Penalties. In addition to interest rate charged on past due balances, the following penalties will be
imposed on the borrower for delayed payments:
Past Due Penalty
The Coop will send a reminder letter to member (cc: co-makers)
Up to 30 days
Loan ceiling will be reduced to 2 x share capital
The Coop will send a reminder letter to member (cc: co-makers)
Penalty fee of 3% of monthly amortization
31-60 days
Loan ceiling will be reduced to amount of share capital contribution
Co-makers will be informed that past due balances may be charged to them
Penalty fee of 6% of monthly amortization
First demand letter from Coop’s legal counsel (cc: co-makers)
61-90 days
Loan availment will be suspended for 6 months after all loans have been paid
Loan amortizations may be transferred to co-makers
Penalty fee of 9% of monthly amortization
Second demand letter from Coop’s legal counsel (cc: co-makers)
91-120 days
Loan availment will be suspended for 1 year after all loans have been paid
Loan amortizations will be transferred to co-makers
When past due balances remain unpaid for more than 90 days, the co-makers shall bear the outstanding
liability including the interest and penalty charges therein.
When past due balances remain unpaid for more than 120 days, the Cooperative may exercise the option to
terminate the borrower’s membership and close the member’s Share Capital Contribution against his/her
outstanding balance.
Section 10. Pre-termination and Restructuring. Any loan can be pre-terminated or restructured at any time
subject to a surcharge of 3% of the outstanding loan balance.
Section 11. Credit Life Insurance. As a protection for the Cooperative as well as the Borrower, co-makers,
and dependents, all loans above Twenty Thousand Pesos (20,000.00) will be secured by a credit life policy
which will be for the account of the Borrower. The credit life policy shall be from a reputable insurance
company to be identified by the Cooperative.
Section 12. Procedure. The following procedures will be followed when availing of the Cooperative’s loan
products:

1. Member to secure a Loan Application Form either online or from the Coop Admin.
2. Member to fill-up the form and submit the accomplished form to the Cooperative.
3. The Cooperative will check for completeness of the loan application as well as the borrower’s
compliance to the coop’s policies including, but not limited to, Share Capital Contribution, tenure, and
MIGS status, before endorsing the same to the Credit Committee and/or Board of Directors.
4. All compliant loan applications may be approved by at least one member of the Board.
5. All non-compliant loan applications will require special exception approval from the majority of the
Board of Directors.
6. The Coop releases the loan proceeds to the borrower’s bank account on record.
This procedure can be completed in 1-2 weeks for most of the loans assuming borrower is compliant with the
Credit Policy (e.g. tenure, share capital, etc.). Longer processing period will be needed for loan applications
that are not within the Credit Policy as they will require special exception approval from the Board of
Directors.
Note: Where the Board has rejected the loan application, the Board is not obliged to provide any reason for
such rejection or to respond to any explanation with respect to the decision. Members may, however, appeal
for reconsideration within 10 working days and provide additional information for Board consideration.

Article V
RESIGNATIONS
Section 1. Member Resignation. If a member resigns from their employer and/or Cooperative, all loans
become due and demandable. The member is given 2 options to settle his/her obligations with the cooperative:

1. For those continuing as Associate Members (i.e. for those resigning from their employer but staying as
member of the Cooperative)
1. Full Payment: The member may pay-off the remaining balance of the loan in full. The 3%
pre-termination fee is waived.
2. Auto Debit: Member may opt to continue the Auto Debit Arrangement until the loan is paid.
3. Post-dated Checks: Member may issue post-dated checks for the remaining months of the
loan.
2. For those terminating their HPPEMC Membership
1. Full Payment: The member may pay-off the remaining balance of the loan in full. The 3%
pre-termination fee is waived.
2. Auto Debit: Resigning member may opt to continue the Auto Debit Arrangement for a
maximum term of 3 months. A 3% restructuring fee will be charged.
3. Post-dated Checks: Resigning members may issue post-dated checks to pay-off the loan for a
maximum term of 3 months. A 3% restructuring fee will be charged.

If the member fails to execute any of the above options after 60 days from date of resignation, the balance of
the loan will automatically be transferred to the co-maker/s as stipulated in the Loan Application Form. The
Cooperative may opt to apply the member’s capital contribution, dividends, savings deposits, and other
receivables to his/her outstanding loans before transferring the remaining obligations to the co-maker/s.
Section 2. Co-Maker Resignation. If a co-maker resigns, the principal borrower will have to get a new co-
maker (using the Co-Maker Replacement Form) within 30 days from date of co-maker resignation. Only upon
the submission of a Co-Maker Replacement Form shall a resigning co-maker be allowed to withdraw his/her
share capital. Furthermore, failure to replace a co-maker shall mean suspension of new loan availments.
Section 3. Procedure. Members must submit the Termination/Associate Membership Form at least 30 days
prior to date of effectivity. The Termination/Associate Membership Form may be found under Members Area
of the website (login required). Processing time to return member’s share capital (less any outstanding
obligations) is 2-4 weeks. For existing comakers, a Co-Maker Replacement is required per Co-Maker Policy
(Article IV Section 2) before the return of share capital.
Note: The Cooperative is mandated by RA 9510 to report members’ credit data and behaviors to the Credit
Information Corporation or to any other credit information bureaus. A member who is unable to settle his/her
obligations to the cooperative may have a negative credit rating which might affect his/her transactions with
Philippine banks and financial institutions.