TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
“ti v-. e-.fir til ■
25 JUL 14 P4 :15
RLCEIVl.';
S. No.
587
Introduced by SENATOR MARK A. VILLAR
AN ACT
PROVIDING A SOCIALIZED MICRO FINANCING PROGRAM FOR MICRO 
ENTERPRISES, THEREBY PROMOTING ENTREPRENEURSHIP
EXPLANATORY NOTE
The Pondo sa Pagbabago at Pag-asenso (P3) Program of the Department of 
Trade and Industry (DTI) is a landmark government initiative that provides an 
alternative source of cheap and convenient microloans, where micro-entrepreneurs 
like market vendors, sari-sari store owners, and stall owners can avail of loans of 
varying amounts depending on their size and ability to pay.
The P3 Program seeks to address and eliminate informal lending, locally known 
as "5-6 lending". These lenders typically charge exorbitant interest rates and monitor 
payments more frequently than formal financing and credit programs. Despite the 
drawbacks, small businesses prefer borrowing from informal lenders due to high 
collateral and voluminous documentary requirements of formal lending institutions. 
Thus, the P3 Program protects micro-entrepreneurs from usurious lenders.
At present, there remains a need to institutionalize the P3 Program so that the 
thrust in providing cheaper and more convenient financing to microenterprises may 
be maintained.
In view of the foregoing, the approval of this bill is earnestly sought.
MARK A. VILLAR ^


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(4‘ ’ * / 
■ \ 
3^' t • V.
TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S. No.
25 JUL 14 P4 :15
SENATE
587
RliCtiVom liV.
Introduced by Senator MARK A. VILLAR
AN ACT
PROVIDING A SOCIALIZED MICRO FINANCING PROGRAM FOR MICRO 
ENTERPRISES, THEREBY PROMOTING ENTREPRENEURSHIP
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
Section. 1. Short Title. - This Act shall be known as the "Pondo sa Pagbabago 
at Pag-asenso Act' or the "P3 Act.
Sec. 2. Declaration of Policy. - It is the declared policy of the State to foster 
comprehensive national development and inclusive growth and reduce poverty by 
promoting the growth of Micro and Small Enterprises (MSEs), which facilitate local job 
creation, production, and trade in the country. Towards this end, the State shall 
develop policies, plans, and programs, and initiate means to encourage 
entrepreneurial activities and ease the constraints and challenges of MSEs, particularly 
on access to financing
Sec. 3. Objectives. - The objectives of this Act are:
(a) 
Provide an affordable, accessible, sustainable, and simple financing 
program for the country's MSEs, especially those in the poorest populations and 
underserved areas and industries;
(b) 
Provide a better alternative to informal lenders or the so-called "5-6" 
money lending system availed of by MSEs;
(c) 
Reduce the interest rate at which financial services are made available 
to MSEs;


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(d) 
Encourage the development of entrepreneurship and the Micro, Small
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and Medium Enterprise (MSME) sector, particularly MSEs;
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(e) 
Support successful business recovery of MSEs following natural or man-
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made disasters; and,
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(f) 
Provide cash, technical, and administrative assistance to qualified MSEs.
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Sec. 4. Pondo sa Pagbabago at Pag-asenso (P3) Fund. - The Pondo sa
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Pagbabago at Pag-asenso Program, hereinafter referred to as the "P3 Program", shall
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assist MSEs in the form of: a) microfinance or credit; b) cash assistance; and c)
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capacity building.
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Qualified end-borrowers of the P3 Program shall be MSEs defined in Republic
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24 Act No. 6977, as amended, or the "Magna Carta for Micro, Small, and Medium
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Enterprises."
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The P3 Program shall be accessible through the Small Business Corporation
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(SBCorp) and through accredited Partner Financial Institutions (PFIs) such as rural
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banks, thrift banks, cooperatives with a license to lend, microfinance non-
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governmental organizations, or lending companies.
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Sec. 5. Microfinance or Credit Component of the P3 Program. - The SBCorp
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and PFis shall be guided by the following principles in the implementation of the
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Microfinance or Credit Component of the P3 program:
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(a) The loanable amount ceiling for individual loans shall be set initially at
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Two million pesos (Php2,000,000.00) for direct lending and Three hundred thousand
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pesos (Php300,000.00) for lending through accredited PFis which are regularly
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reviewed by the Micro, Small and Medium Enterprise Development (MSMED) Council;
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(b) The interest rate shall not exceed one percent (1%) per month for direct
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lending, and shall not exceed two and a half percent (2.5%) per month for lending
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through accredited PFis;
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(c) 
There shall be no collateral requirement from the P3 Fund borrowers;
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(d) 
The lenders shall have a collection mechanism, whereby payments are
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made on a daily, weekly, or monthly basis, depending on the business income cycle.
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It shall be the duty of the lender to collect the loan principal and the interest payment
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from the borrower; and


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(e) Financial technology-enabled systems and processes shall be utilized in
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the implementation of the P3 Program. Disbursements shall use digital forms of
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payment for both the disbursement of loan proceeds by the lenders, and the recurring
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loan payments by the borrowers.
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Sec. 6. Leading Implementing Agency. - The Small Business Corporation
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(SBCorp), as the financing arm of the Department of Trade and Industry (DTI), shall
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be the lead implementing agency for the Fund. The SBC shall manage the delivery of
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proceeds from the Fund to its beneficiaries through either:
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(a) 
Direct lending. The SBCorp shall prioritize underserved or unserved
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areas and industries, or those not adequately and effectively served by PFIs, including
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provinces where poverty incidence remains high based on official poverty statistics
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from the Philippine Statistics Authority (PSA); and
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(b) 
Lending through accredited PFIs.
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The SBCorp may allocate up to five percent (5%) of the total loans disbursed
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for the period, sourced from the accumulated funding for the P3 Program to cover its
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annual administrative and operating expenses which shall include the salaries of
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regular plantilla personnel involved in the implementation of the P3 Program.
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Sec. 7. Cash Assistance and capacity Building Components of the P3 Program.
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- The SBCorp, in consultation with the DTI's Bureau of Micro, Small, and Medium
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Enterprise Development (BMSMED), National Anti-Poverty Commission (NAPC), and
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the Bangko Sentral ng Pilipinas (BSP), shall develop a cash assistance program
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exclusively for MSEs in need of capital
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The SBCorp shall provide MSEs under the Capacity Building Component with
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free technical and administrative support, including but not limited to, product
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development, skills and leadership training, packaging and design, quality control,
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market promotion, client or supplier matching, and cash literacy and planning.
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The SBCorp shall be guided by the following principles in the implementation
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of the cash Assistance and Capacity Building Components of the P3 program:
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(a) 
The assistance shall be extended only to beneficiaries who have satisfied
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the requirements under this Act;
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(b) 
Each cash assistance shall range from Five thousand pesos
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(Php5,000.00) to Fifty thousand pesos (Php50,000.00), depending on the number of


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employees, number of years in business, financial hardship, and such other criteria as 
may be determined by SBCorp. The SBCorp is hereby authorized to adjust these 
amounts to meet present market demand after the mandatory review provided in this 
Act;
(c) 
Priority shall be given to MSEs classified under the priority business areas 
of their respective regions, particularly the public market vendors to strengthen their 
financial capabilities and improve public services; and
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There shall be a mandatory review of the Cash Assistance and Capacity 
Building Components of the P3 program every three (3) years to ensure that they 
meet the present market demands.
Sec. 8. Eligibility for Cash Assistance. - The applicants of the Cash Assistance 
must comply with the following eligibility requirements:
(a) Must be an owner of a registered MSE who is at least eighteen (18) years 
old;
b) Must not have availed of the cash assistance regardless of the number 
of businesses owned;
(c) 
Must be a member in good standing of a duly registered cooperative or 
association, or a resident of the local government unit (LGU), from which the member 
intends to avail of the cash assistance;
(d) 
The institution shall have a mechanism whereby cash assistance is made 
on a weekly or monthly basis
(e) 
Must submit a comprehensive feasibility study of the business proposal;
(f) 
Must attend a DTI-accredited livelihood seminar, as evidenced by a 
certificate of participation; and
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Must be willing to state under oath the facts establishing the foregoing.
Sec. 9. Registry of MSEs. - The DTI shall create a registry of all MSMEs per
region based on their size category (i.e., micro, small, and medium) and business area 
(i.e., agriculture, livestock, fisheries, food processing, fabric and clothing, eco-tourism 
activities, pottery and handicrafts, furniture and hardwood, information and 
technology, etc.).
Sec 10. Policy Oversight Function. - The MSMED Council shall monitor the 
implementation of the P3 Program and shall submit an annual report to the President


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of the Philippines and to Congress, through the Congressional Oversight Committee
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on Micro, Small, and Medium Enterprise Development (COC MSMED) Council.
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Sec. 11. Appropriations. - The total amount of One hundred billion pesos
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(Phpl00,000,000,000.00), for the next two (2) years, upon effectivity of this Act, or
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Fifty billion pesos (Php50,000,000,000.00) per year for the next two (2) years upon
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effectivity of this Act shall be appropriated for the initial implementation of the P3
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Program for microfinance, cash assistance, and capacity building program. Thereafter,
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such sums as may be necessary shall be included in the annual General Appropriations
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Act.
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In addition, the amount of Five hundred million pesos (Php500,000,000.00) is
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hereby appropriated as a special development fund to support the initial
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implementation of this Act. The funds shall be held in trust by the DTI in collaboration
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with the Development Bank of the Philippines (DBP), the Land Bank of the Philippines
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(LBP), and other government financial institutions.
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Sec. 12. Impiementing Ruies and Reguiations. - Within ninety (90) days from
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the approval of this Act, the DTI shall formulate and promulgate the necessary rules
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and regulations to implement the provisions of this Act.
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Sec. 13. Separability Clause. - If any provision of this Act is declared
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unconstitutional, the remainder thereof not otherwise affected shall remain in full force
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and effect.
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Sec. 14. Repealing Clause. - All laws, executive orders, rules and regulations,
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or parts thereof inconsistent with any provision hereof are hereby repealed or modified
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accordingly
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Sec. 15. Effectivity. - This Act shall take effect after fifteen (15) days from its
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publication in the Official Gazette or in a newspaper of general circulation.
Approved,