Borrowing and Credit Policy

Borrowing Policy

All major borrowings shall be obtained from the source of least cost but must be in compliance with previous loan covenants, agreements and commitments.

Borrowings may not exceed the loan limit set forth per board resolution.

The Board of Directors, in coordination with the General Manager, shall review the loan limit resolution annually. If need be, the General Manager may request for the approval of the Board of Directors to increase the borrowing limit during the year. To assure the availability of adequate funds and credit services at reasonable cost, the cooperative shall maintain alternative sources of capital utilizing the Cooperative Credit System, other lending institutions, and other sources, as appropriate.

 

Handling Delinquent Accounts

The Credit Committee shall review, together with the General Manager, the accounts receivable on a periodic basis.

Delinquent notices shall be sent to concerned members with past due accounts per credit policy.

Delinquent or unpaid balances of accounts receivable over one month past due shall be or may be referred to the Cooperative’s Attorney for collection and/or charges against the member’s paid up share, upon action of the Board of Directors. If it becomes necessary to apply the member’s paid up share to member’s receivable or an action is taken through a collection agency or civil court, the member’s privileges and benefits may be suspended subject to due notice and observance of procedures in accordance with the Cooperative Code and any applicable laws.

 

Types of Loans: 

1. Regular Loan - loan borrowed by a member using as basis his/her share capital actually paid. A member can borrow an amount equivalent to one hundred percent (100%) of his/her share capital, less existing loans, if any. A member can apply for a loan from the Cooperative using fifty percent (50%) of his/her retirement/separation benefits as collateral, less existing loans and other obligations, if any.
2. Emergency/Calamity Loan - available to members to address present financial needs that are emergency in nature such as death in the family, hospitalization due to serious illness, victims of calamities, etc., subject to meeting other policies on loan borrowing. The maximum loanable amount under this type is P20,000.00, payable in one (1) year and shall be subject to the borrower’s minimum net pay qualification.
3. Travel Loan – loans for domestic and international travel. The member applicant is required to present a proof or any document to support his/her application that the loan shall be for travel purposes and that travel arrangement shall be made with ThoMEC’s accredited travel agency, amount of which shall be subject to the approval of the Board of Directors.
    

CREDIT LENDING POLICY

 

1. The Board of Directors shall be the overall authority over the lending policy of the cooperative which has the legal and moral duty to ensure that the policy drawn up promotes safe and sound lending practices that will protect not only the savings of its members but the assets of the Cooperative’s as well.
   
   Let it be understood that the Board of Directors may change the loan policy in part or in full as circumstances may require.
   
   
2. The Credit Committee shall be responsible in evaluating all loan applications and shall recommend to the Board of Directors approval of such applications. Notwithstanding, the Board of Directors may delegate authority to the General Manager or other employees of the Cooperative to process loan applications under terms and conditions set forth depending on the nature of the loan, that is, on the amount and type of loan, which must also be submitted to the Credit Committee, for evaluation.
   
   

   Credit Procedure for Regular Loans

   
   
   1. The applicant shall fill out the loan application form and the duly accomplished form shall be submitted by a staff to the Credit Committee for evaluation/assessment.
   2. The loan releases shall be on “first come first served” basis and shall depend on the availability of funds.
   3. The interest rate to be imposed on regular loan shall be twelve percent (12%) per annum using the diminishing balance method.
   4. The amount for the amortization of principal plus interest each periodic payment shall be fixed.
   5. As service fee, the following charges shall be deducted in advance from the loanable amount:
      
      

      a.   P20,000.00 and below	P100.00
      b.   P20,000.00 to P50,000.00	P250.00
      c.   P50,001.00 to P100,000.00	P400.00
      d.   P100,001.00 and up	P500.00

      
      As capital build-up, for loans amounting to P50,000.00 and above, 1% of the loanable amount or P1,000.00, whichever is higher, shall be deducted from the amount of loan which shall be automatically added to the paid up shares of the borrowing member.
      
      
   6. The period of amortization shall be as follows:
      
      

      a.   P30,000.00 and below	12 months
      b.   P30,001.00 up to P50,000.00	24 months
      c.   P50,001.00 up to P100,000.00	36 months
      d.   P100,001.00 up to P200,000.00	48 months
      e.   P200,001.00 and above	60 months

       
   7. The loanable amount shall be limited to the amount of paid-up shares of the borrowing member or equivalent to three (3) months or six (6) payday deduction of subscribed shares, whichever is higher.
   8. Qualified to apply shall be members with a take home pay of P3,000.00 and above per payday.
   9. For failure to meet any one of the above mentioned requirements, the member borrower shall be required to have a qualified loan co-maker who shall have the same responsibility as the principal applicant. Otherwise, the matter shall be subject to the discretion or approval of Board of Directors.
   10. For “retirement loan”, a member can apply for a loan equivalent to fifty percent (50%) of his/her estimated retirement benefits, net of tax, plus his/her paid up shares and less any existing loan balances to arrive at the net loanable amount.
       
       Should a member wishes to apply for a loan to pay his/her existing UST retirement loan, the applicant shall be required to have a qualified co-maker, to co-make at least twenty percent (20%) of his/her total ThoMEC retirement loan. Otherwise, a declaration/statement shall be issued stating that he/she, the co-maker that is, shall not definitely borrow from the UST retirement loan fund within a year from the time of his/her ThoMEC retirement loan.
       
       
   11. Any borrower with previous existing loan/s shall be allowed to apply for another loan only after five (5) months from the last loan made, that is, if the borrowing member is still qualified.
       
       
   • Policy Nos. 2, 4, 5 and 6 do not apply to special loans, such as educational loans.
     
     

Interest on Loans

Loans granted by the Cooperative shall be charged with simple rates of interest as established from time to time by the Board of Directors. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO REVIEW AND CHANGE INTEREST RATES AS CIRCUMSTANCES MAY REQUIRE.

1. Regular ThoMEC Loan - twelve percent (12%) diminishing rate
2. Emergency, Educational, Travel Loans - in accordance with the interest rate set by the Board of Directors.

 

Procedure for Loan Application

1. Members shall fill out the application form and the duly accomplished form shall be submitted at the ThoMEC Office.
2. Loan application form must be accompanied by the borrower’s latest pay slip covering the last two (2) pay dates immediately preceding the loan application.
3. Where necessary and if applicable, clearance from concerned departments shall be required to determine the borrower’s other liabilities/payables to the University. Thus, certain kinds/types of loans require accomplishment of the other forms, for clearance purposes. 
4. Depending on the amount of loan, the application shall then be forwarded to the Credit Committee for evaluation and to recommend approval. The signature of the majority of either the Credit Committee or the Board of Directors signifies approval of the loan.
5. After the evaluation, the staff shall inform the applicant if his/her loan application has been approved or not. If approved, the staff shall prepare the voucher for signature of authorized officers, (from accountant, audit and Treasurer), then the same goes back to the staff for check preparation.
6. Check/s of approved loan/s shall be released not later than one (1) week from the date of approval made by the Credit Committee and/or the Board of Directors.

 

Policy on Loans that Require Co-Makers

1. The amount guaranteed by a Co-Maker shall be deducted from his/her loanable amount.
2. Other cases involving Co-Makers shall be resolved by the Board of Directors.