Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19TH CONGRESS 
 First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative Michael L. Romero 
EXPLANATORY NOTE 
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Last November 16, 2001; the Small Business Guarantee and Finance Corporation 
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(SBGFC) and the Guarantee Fund for Small and Medium Enterprises (GFSME) were 
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merged through Executive Order 28, and became known as the Small Business 
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Corporation (SB Corporation). 
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Aside from the creation of SBGFC, the law likewise has the following significant 
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provisions: 
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1) the creation of the Small and Medium Enterprise Development (SMED);
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2) the mandatory allocation of credit resources to small enterprises; and
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3) the rationalization of government assistance programs and agencies
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concerned with the development of SMEs. SBGFC commenced its operations 
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on July 16, 1992. It is attached to the Department of Trade and Industry and 
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is under the policy, program and administrative supervision of the Small and 
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Medium Enterprise Development (SMED) Council. 
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At the time of the merger, GFSME was a guarantee fund operated independently 
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by a Management Committee and professional staff under the Livelihood 
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Corporation, a corporation attached to the Office of the President of the Philippines. 
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GFSME’s services were restricted to offering of guarantee services to participating 
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financial institutions lending to SMEs from the time it started commercial 
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operations in 1984. 
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This House Bill seeks to create a more effective and comprehensive financial 
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institution better geared to meet the needs of the Micro Enterprise market. 
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July 1, 2022 
11:13 am
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Earnest approval of this bill is hereby requested. 
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MICHAEL L. ROMERO Ph.D. 
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19TH CONGRESS 
 First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative Michael L. Romero 
AN ACT 
PROVIDING A SOCIALIZED MICROFINANCING PROGRAM FOR 
MICRO ENTERPRISES THEREBY PROMOTING 
ENTREPRENEURSHIP, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1.  TITLE. – This Act shall be known as the “Pondo sa Pagbabago 
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at Pag-asenso Act” or the “P3 Act”. 
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SECTION 2. DECLARATION OF POLICY. – It is the declared policy of the 
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State to foster national development, promote inclusive growth, and reduce poverty 
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by promoting the growth of micro enterprises that facilitate local job creation, 
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production and trade in the country. 
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Towards this end, the State shall develop policies, plans and programs, and 
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initiate means to encourage entrepreneurial activities, and to ease the constraints 
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and challenges to micro enterprises, particularly on access to financing. 
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SECTION 3. OBJECTIVES. – The objectives of this Act are as follows: 
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a. To provide an affordable, accessible and simple micro financing 
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program for the country’s micro enterprises, especially those in the poorest 
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populations; 
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b. To provide a better alternative to the informal lenders or the so-called 
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“5-6” money lending system availed of by micro enterprises; and 
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c. To bring down the interest rate at which micro finance is made 
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available to micro enterprises.  
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SECTION 4. CREATION OF THE PONDO SA PAGBABAGO AT PAG-
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ASENSO (P3). – There is hereby created the Pondo sa Pagbabago at Pag-asenso 
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Fund, hereinafter referred to as the “P3 Fund”, which shall be lent out to qualified 
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micro enterprises under such terms and conditions that will meet the purposes of 
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this Act. 
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The beneficiaries of the P3 Fund shall be micro enterprises, as defined under 
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Republic Act No. 6977, as amended, otherwise known as the “Magna Carta for 
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Micro, Small and Medium Enterprises (MSMEs)”. 
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The fund shall be primarily accessible through accredited partner financial 
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institutions (PFIs) such as rural banks, thrift banks, development banks, 
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cooperatives with license to lend, micro financing institutions (MFIs), or lending 
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companies duly licensed by the Bangko Sentral ng Pilipinas (BSP), Cooperative 
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Development Authority (CDA), or the Securities and Exchange Commission (SEC). 
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SECTION 5. LEAD IMPLEMENTING AGENCY. - The Small Business 
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Corporation (SB Corp.), the financing arm of the Department of Trade and Industry 
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(DTI), shall be the lead implementing agency for the P3 Fund. It shall handle the 
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fund delivery to micro enterprises through the following modes: 
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a. Direct lending; and 
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b.   Lending through accredited PFIs. 
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To support administrative and operating expenses of the SB Corp., an 
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amount of not more than five percent (5%) of the total loans disbursed shall be 
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provided annually to the SB Corp., to be sourced from additional annual allocation. 
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SECTION 6. FEATURES OF THE P3 FUND. – The P3 Fund shall have the 
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following features: 
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a. The interest rate to be imposed on the loan availed of by the P3 Fund 
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beneficiaries shall not exceed two and a half percent (2.5%) per month: Provided, 
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That after three (3) years from the effectivity of this Act, a higher ceiling may be 
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allowed up to three percent (3%) per month, subject to the review of the Micro, 
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Small And Medium Enterprise Development (MSMED) Council; 
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b. The interest earnings shall accrue to the P3 Fund; 
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c. There shall be no collateral requirement from the P3 Fund loan 
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beneficiaries; and 
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d. The loanable amount for individual loans shall be set and regularly 
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reviewed by the Micro, Small and Medium Enterprise Development (MSMED) 
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Council. 
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SECTION 7. POLICY OVERSIGHT FUNCTION. – The Micro, Small and 
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Medium Enterprise Development (MSMED) Council shall monitor the utilization 
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and disbursements of the P3 Fund. It shall submit to the President of the 
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Philippines and to Congress, through the Congressional Oversight Committee on 
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Micro, Small and Medium Enterprise Development (COC-MSMED), a yearly report 
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on the status of the P3 Fund. 
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SECTION 8. APPROPRIATIONS. – The amount necessary to carry out the 
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provisions of this Act shall be charged against the appropriations released for the 
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purpose under the General Appropriations Act for the SB Corp. Thereafter, such 
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sums as may be necessary for the continued implementation of this Act shall be 
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included in the annual General Appropriations Act. 
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SECTION 9. IMPLEMENTING RULES AND REGULATIONS. – Within sixty 
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(60) days from the approval of this Act, the DTI shall formulate and promulgate the 
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necessary rules and regulations to implement the provisions of this Act. The 
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implementing rules and regulations issued pursuant to this section shall take effect 
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thirty (30) days after its publication in at least two (2) newspapers of general 
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circulation. 
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SECTION 10. SEPARABILITY CLAUSE. – If any part or section of this Act 
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is declared unconstitutional, such declaration shall not affect in any manner other 
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parts or sections hereof. 
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SECTION 11. REPEALING CLAUSE. – All laws, decrees, proclamations, 
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issuances, or ordinances that are contrary to or inconsistent with the provisions of 
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this Act are hereby amended, repealed or modified accordingly. 
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SECTION 12. EFFECTIVITY. – This Act shall take effect fifteen (15) days 
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after its publication in the Official Gazette or in any newspaper of general 
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circulation. 
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Approved, 
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