Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
20th Congress 
First Regular Session 
 
 House Bill No. 674 
Introduced by REPRESENTATIVE EMIGDIO P. TANJUATCO III 
EXPLANATORY NOTE 
With the current setback we have experienced due to the Covid-19 pandemic, it is 
necessary to put a high priority on the development of micro, small and medium enterprises 
(MSMEs) to enable faster economic recovery. They are, after all, our country’s economic 
backbone and an important means of equitable distribution of the benefits of growth. 
The MSME Sector accounts for 62.66% of total employment in 2020. Of the total number 
of businesses in the country, 99.51% are MSMEs, of which, 88.77% are micro enterprises, 
10.25% are small enterprises and 0.49% are medium enterprises. 
Despite its evident importance to the economy, lack of access to financing and related 
forms of support continue to be a major handicap to the country’s MSMEs. 
This bill that seeks to strengthen Republic Act 6977, otherwise known as the Magna Carta 
for MSMEs, as amended, is a necessary policy response to this deficiency. The proposed 
amendments in this bill aims to address the following: 
• extension of mandatory lending provisions to MSMEs for another 10 years without further
extension, and providing for the rules of compliance thereof;
• Capitalization of SB Corporation and strengthening of its guarantee program; and
• providing for bankruptcy preventive measures in the form of an enterprise rehabilitation
fund for enterprises affected by disasters and other crisis.
In view of the foregoing, immediate approval of this Act is earnestly sought. 
EMIGDIO P. TANJUATCO III 
July 1, 2025
8:00 am


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
20th Congress 
First Regular Session 
 
 House Bill No. 674 
Introduced by REPRESENTATIVE EMIGDIO P. TANJUATCO III 
 AN ACT 
FURTHER PROMOTING ENTREPRENEURSHIP BY STRENGTHENING, 
EMPOWERING AND ENHANCING THE FINANCING PROGRAMS FOR 
MICRO, SMALL AND MEDIUM ENTERPRISES, AMENDING FOR THE 
PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED, OTHERWISE 
KNOWN AS THE “MAGNA CARTA FOR MICRO, SMALL AND MEDIUM 
ENTERPRISES (MSMEs)” 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 2 of Republic Act No. 6977, as amended, is hereby further amended 
to read as follows: 
“SEC. 2. Declaration of Policy. – Recognizing that MSMEs have the 
potential [for] TO GENERATE more employment [generation] and SPUR 
economic growth and therefore can help provide a self-sufficient industrial 
foundation for the country, it is hereby declared the policy of the State to 
promote, support, strengthen and encourage the growth and   development of 
MSMEs in all productive sectors           of the economy particularly rural/agri-
based, MANUFACTURING, FINANCE AND SERVICES enterprises.  To this 
end, the State shall recognize the specific needs of the MSMEs and shall 
undertake to promote entrepreneurship, support entrepreneurs, encourage the 
establishment of MSMEs and ensure their continuing viability and growth and 
thereby attain countryside industrialization by: 
“x x x.” 
SEC. 2. Section 3 of the same Act, as amended, is hereby further amended to 
read as follows: 


“SEC. 3. Micro, Small and Medium Enterprises (MSMEs as 
Beneficiaries. — MSMEs shall be defined as any business activity or 
enterprise engaged in industry, agribusiness, [and/or] OR services, 
whether single proprietorship cooperative, partnership or corporation 
whose total assets, inclusive of those arising from loans but exclusive 
of the land on which the particular business entity’s office, plant and 
equIpment are situated, must have value falling under the following 
categories: 
 
micro: not more than P3,000,000 
 
small: P3,000,001 - P15,000,000 
 
medium: P15,000,001 -P100,000,000 
 
“The above definitions shall be subject to review EVERY 
THREE (3) YEARS and adjustment, WHEN NECESSARY, by 
the Micro, Small and Medium Enterprises Development (MSMED) 
Council under Section 6 of this Act or upon recommendation of sectoral 
organizations concerned, taking into account inflation and other 
economic indicators. x x x” 
SEC. 3. Section 4 of the same Act, as amended, is hereby further amended to 
read as follows: 
“SEC. 4. Eligibility for Government Assistance. – To qualify for 
assistance, counseling, incentives and promotion under this Act, 
businesses falling under the above definition must be: 
 
“a) duly registered with the appropriate agencies as presently 
provided by law:  Provided, That in the case of micro enterprises as 
defined herein, registration with the office of the municipal or city 
treasurer shall be deemed sufficient compliance with this requirement; 
 
“b) one hundred percent (100%) owned, capitalized by Filipino 
citizens, whether single proprietorship or partnership. If the enterprise is a 
juridical entity, at least sixty percent (60%) of its capital or outstanding stocks 
must be owned by Filipino citizens; 
 
“x xx.” 
 
[“Eligible MSMEs shall be entitled to a share of at least 
ten percent (10%) of total procurement value of goods and services 
supplied 
to 
the Government, its bureaus, offices and agencies 
annually.] 
 
[“The Department of Budget and Management shall 
monitor the compliance of government agencies on the required 
procurement for MSMEs and submit its report to the MSMED Council 
on a semestral basis and to the Congress of the Philippines, through 
its appropriate committees on a yearly basis.”] 
  
SEC. 4. A new section is hereby inserted after Section 4 of the same Act, 
as amended, and numbered as Section 4-A to read as follows: 
“SEC. 
4-A. 
GOVERNMENT 
ASSISTANCE, 
INCENTIVES 
AND 
BENEFITS FOR ELIGIBLE MSMEs. – Eligible MSMEs shall be entitled to the 
following government assistance, incentives and benefits: 
“a) UPON RECEIPT OF THE APPLICATION OF AN MSME FOR ANY 
PERMIT AND LICENSE FROM ANY LOCAL GOVERNMENT UNIT (LGU), 
INCLUDING A BARANGAY, THE LGU SHALL ISSUE A PROVISIONAL 


AUTHORITY EFFECTIVE FOR SIX (6) MONTHS, SUBJECT TO THE FINAL 
APPROVAL OF THE APPLICATION AND THE ISSUANCE OF THE PERMIT 
OR LICENSE APPLIED FOR. 
 
“b) THE COST FOR THE ISSUANCE OF ALL PERMITS, LICENSES, 
CERTIFICATIONS, AND OTHER SIMILAR DOCUMENTS REQUIRED FOR 
THE CONDUCT OF BUSINESS FOR REGISTERED MICROENTERPRISES 
SHALL NOT EXCEED FIVE HUNDRED PESOS (₱500.00) PER AGENCY. 
FOR  REGISTERED  SMALL  ENTERPRISES,  THE  COST  SHALL  NOT 
EXCEED THREE THOUSAND PESOS (₱3,000.00) PER AGENCY FOR A 
PERIOD OF FIVE (5) YEARS. 
“c) THE NATIONAL GOVERNMENT, ITS BUREAUS, OFFICES, AND 
AGENCIES SHALL ALLOCATE AT LEAST TWENTY PERCENT (20%) OF 
ALL ITS PROCUREMENT OPPORTUNITIES FOR GOODS AND SERVICES 
TO  ELIGIBLE  MSMEs  IN  ACCORDANCE  WITH  THE  APPLICABLE 
PROCUREMENT LAW, RULES, AND REGULATIONS. 
“THE GOVERNMENT PROCUREMENT POLICY BOARD SHALL 
FORMULATE THE RULES FOR THE EFFECTIVE IMPLEMENTATION OF 
THIS  PROVISION  AND  ITS  TECHNICAL  SUPPORT  OFFICE  SHALL 
MONITOR THE COMPLIANCE OF GOVERNMENT AGENCIES ON THE 
REQUIRED PROCUREMENT FOR MSMEs AND SUBMIT ITS REPORT TO 
THE  MSMED  COUNCIL  ON  A  SEMESTRAL  BASIS  AND  TO  THE 
CONGRESS  OF  THE  PHILIPPINES,  THROUGH  ITS APPROPRIATE 
COMMITTEES ON A YEARLY BASIS. 
“d) DULY REGISTERED MICRO AND SMALL ENTERPRISES SHALL 
BE ENTITLED TO A DISCOUNT OF AT LEAST TWENTY PERCENT (20%) 
ON SHIPPING AND DELIVERY FEES FOR THEIR PRODUCTS AND RAW 
MATERIALS,  AS  WELL  AS  FOR  MAILING,  FREIGHT,  AND  OTHER 
SERVICES  PROVIDED  BY  EITHER  PUBLIC  OR  PRIVATE COURIERS. 
“e) THE OFFICIAL IN CHARGE WITH THE OPERATION OF 
GOVERNMENT 
BUILDINGS, 
STRUCTURES, 
AND 
OPEN 
AREAS, 
INCLUDING PUBLIC MARKETS, WHETHER WET OR DRY, AIRPORTS, 
SEA PORTS, FISH PORTS, PARKS, ZOOS, CONVENTION CENTERS, 
ENTERTAINMENT CENTERS, TOURISM CENTERS, SCHOOLS, SCHOOL 
CAMPUSES, AND OTHER SIMILAR STRUCTURES OR AREAS SUITABLE 
FOR SELLING OR 
MARKETING WHETHER PERMANENT OR 
TEMPORARY,  THAT  CAN  BE  USED  AS  SELLING  AREAS,  SHALL 
PROVIDE AN AUTHORIZED MSME STORE FREE SPACE MEASURING AT 
LEAST  ONE  PERCENT  (1%)  OF  THE  TOTAL  SPACE  AVAILABLE 
THEREIN. FOR PURPOSES OF THIS ACT, FREE SPACE REFERS TO THE 
SPACE THAT MAY BE USED FOR SELLING PURPOSES WITHOUT NEED 
FOR THE 
PAYMENT 
OF 
RENT GOODWILL FEES, ROYALTIES, 
COMMISSION, PERCENTAGES ON SALES, NOR ANY OTHER 
SIMILAR SCHEME. 
“f) 
THE OWNER 
OR 
OPERATOR 
OF 
PRIVATE 
MALLS, 
SUPERMARKETS, SHOPPING CENTERS, AND COMMERCIAL SELLING 
ESTABLISHMENTS  SHALL  BE  ENCOURAGED  TO  PROVIDE  FREE 
SPACE TO ANY AUTHORIZED MSME STORE. 
“THE 
MSMED 
COUNCIL 
OF 
THE 
CONCERNED 
CITY, 
MUNICIPALITY, OR BARANGAY SHALL APPROVE THE MSME STORE 
THAT MAY OCCUPY THE FREE SPACE, UPON THE RECOMMENDATION 


OF  THE  LOCAL  OFFICE  OF  THE  DEPARTMENT  OF  TRADE  AND 
INDUSTRY (DTI). THE FREE SPACE ALLOCATED FOR THE MSME 
STORE  SHALL  BE  PROVIDED  IN  THE  FOLLOWING  ORDER  OF 
PREFERENCE: 
1) ONE TOWN, ONE PRODUCT STORE OR GO LOKAL! 
STORE OF THE DTI; 
2) MSME 
KUMUNIDARAN, 
PRODUKTO, 
AT 
RESONABLENG 
SERBISYO STORE (OR “KUMPARE STORE”); OR 
3) A LOCAL MICRO OR SMALL ENTERPRISE STORE. 
 “ONCE AN MSME STORE IS IN PLACE, ITS REMOVAL OR 
REPLACEMENT SHALL NOT BE ALLOWED EXCEPT FOR VALID CAUSE 
AND AFTER OBSERVANCE OF DUE PROCESS. 
“THE APPROVAL AND THE REMOVAL OF THE MSME STORE THAT 
WILL BE GIVEN FREE SPACE SHALL BE REPORTED BY THE MSMED 
COUNCIL OF THE CONCERNED CITY, MUNICIPALITY, OR BARANGAY 
TO THE CONGRESSIONAL OVERSIGHT COMMITTEE ON MICRO, 
SMALL AND MEDIUM ENTERPRISE DEVELOPMENT.” 
“g) THE OWNER OR OPERATOR OF PRIVATE MALLS SHALL ALSO 
BE ENCOURAGED TO ALLOCATE TWENTY PERCENT (20%) OF THEIR 
TOTAL RENTABLE SPACE TO LOCAL MICRO AND SMALL 
ENTERPRISES WHICH SHALL BE EXTENDED A TWENTY PERCENT 
(20%) DISCOUNT ON RENTAL RATES. PRIVATE MALLS SHALL NOT 
CHARGE ROYALTY CHARGES, GOODWILL CHARGES, COMMISSION 
CHARGES, PERCENTAGE OF SALES, AND OTHER SIMILAR SCHEMES 
UPON THE MSMEs. 
“h)  FREE  BASIC  CREDIT  REPORT  FOR  MSMEs.  –  THE 
CREDIT INFORMATION CORPORATION (CIC) SHALL PROVIDE MSMEs 
WITH BASIC CREDIT REPORTS, FREE OF CHARGE, ONCE PER YEAR. 
THE BASIC CREDIT REPORT SHALL SERVE AS THE PRIMARY PROOF 
OF CREDITWORTHINESS OF MSMEs IN THEIR LOAN APPLICATIONS. 
“THE SECURITIES AND EXCHANGE COMMISSION (SEC) SHALL 
ISSUE THE RULES AND REGULATIONS NECESSARY FOR THE 
IMPLEMENTATION OF THIS SECTION WITHIN THIRTY (30) DAYS UPON 
THE EFFECTIVITY OF THIS ACT.” 
 
SEC. 5. Section 5 of the same Act, as amended, is hereby further amended to read as 
follows: 
“SEC. 5. Guiding Principles. – To set the pace for MSME development, the 
State shall be guided by the following principles: 
“a) Minimal set of rules and simplification of procedures and requirements. All 
government agencies having to do with MICRO AND small enterprises shall 
pursue the principles of minimum regulation to ensure stability of rules and to 
encourage entrepreneurial spirit among the citizenry. The agencies shall see 
to it that procedural rules and requirements, within their respective offices in 
coordination with other agencies, are minimized in the act of registration, 
availment of financing and accessing other government services and 
assistance.  


“b) Role of the private sector. In order to hasten growth and expansion of 
MICRO, small and medium enterprises, the private sector throughout the 
country shall be encouraged to assist in the effective implementation of this Act 
by participating in government programs for MICRO, small and medium 
enterprises strictly in accordance with the law, and consistent with the 
attainment of the purposes hereof. To encourage private sector participation, 
the Council, in consultation with the concerned sector, may recommend 
simplified procedure and localized incentives to MICRO AND small enterprises. 
The Government shall encourage the organization and establishment of 
MICRO, small and medium enterprise industry associations at the local and 
regional levels preferably unified under a national federation/association.  
“c) Coordination of government efforts. Government efforts shall be 
coordinated to achieve coherence in objectives. All appropriate offices, 
particularly those under the Departments of Trade and Industry,  
Finance, Budget and Management, Agriculture, Agrarian Reform, Environment 
and Natural Resources, Labor and Employment, Transportation [and 
Communications], 
INFORMATION 
AND 
COMMUNICATIONS 
TECHNOLOGY, Public Works and Highways, Science and Technology, 
Interior and Local Government and Tourism as well as the National Economic 
and Development Authority, Philippine Information Agency and the Bangko 
Sentral ng Pilipinas, through their national, regional and provincial offices shall, 
to the best of their efforts and in coordination with local government units, 
provide 
the 
necessary 
support 
and 
assistance 
to 
MSMEs. 
THE 
DEPARTMENT OF TRADE AND INDUSTRY SHALL BE THE LEAD AGENCY 
THEREFOR. 
“x x x.” 
 
SEC. 6. Section 6 of the same Act, as amended, is hereby further amended to read as 
follows: 
“SEC. 6. Micro, Small and Medium Enterprises Development Plan 
(MSMEDP). – The President shall approve a six-year micro, small and medium 
enterprises development plan prepared by the Department of Trade and 
Industry (DTI) which shall form part of the [Medium Term] Philippine 
Development Plan ([MT]PDP). It shall be formulated in consultation with the 
private sector, validated and updated semestrally. Such plan shall include a 
component on a micro credit financing scheme.” 
 
SEC. 7. Section 7 of the same Act, as amended, is hereby further amended to read as 
follows: 
“SEC. 7. Micro, Small and Medium Enterprise Development (MSMED) 
Council. – The existing Small and Medium Enterprise Development Council, 
which was created by Republic Act No. 6977, as amended, shall be 
strengthened to effectively spur the growth and development of MSMEs 
throughout the country, and to carry out the policy declared in this Act and shall 
now be known as the Micro, Small and Medium Enterprise Development 
(MSMED) Council. The Council shall be attached to the Department of Trade 
and Industry and shall be constituted within sixty (60) days after the approval 
of this Act. 
“x x x.” 


 
SEC. 8. Section 7-A of the same Act, as amended, is hereby further amended to read as 
follows: 
“SEC. 7-A. Composition of the Micro, Small and Medium Enterprises 
Development (MSMED) Council. – The members of the Council shall be the 
following: 
“(a) The Secretary of Trade and Industry as Chair; 
“(b) The Secretary of Agriculture; 
“(c) The Secretary of the Interior and Local Government; 
“(D) THE SECRETARY OF FINANCE; 
“(E) THE SECRETARY OF SCIENCE AND TECHNOLOGY; 
“(F) THE SECRETARY OF TOURISM; 
“(G) THE  SECRETARY  OF  ENVIRONMENT  AND  NATURAL 
RESOURCES; 
“[(d)] (E) Three (3) representatives from the MSME sector, [to represent 
Luzon, Visayas and Mindanao, with at least one (1) representative from the 
microenterprise 
sector] 
TO 
BE 
DESIGNATED 
BY 
A 
NATIONAL 
ORGANIZATION REPRESENTING AND DOMINATED BY MSMEs; AND 
“[(e) One (1) representative from the women sector designated by the 
Philippine Commission on Women;] 
“[(f) One (1) representative from the youth sector designated by the 
National Youth Commission; and] 
“[(g)] (I) The [Chairman] PRESIDENT of THE Small Business 
Corporation. 
“A. Advisory Unit.  –  There shall be an Advisory Unit to the Council, which 
shall 
consist 
of 
the 
following 
OR 
THEIR 
DULY 
DESIGNATED 
REPRESENTATIVE: 
“(a) The Secretary of [Science and Technology] AGRARIAN REFORM; 
“(B) 
THE 
SECRETARY 
OF 
ECONOMY, 
PLANNING 
AND 
DEVELOPMENT 
“[(b)] (C) The Governor of the [Bangko Sentral ng Pilipinas] BSP; 
“(D) THE CHAIRPERSON OF THE SEC; 
“[(c)] (E) The President of the Land Bank of the Philippines; 
“[(d)] (F) The President of the Development Bank of the Philippines; 
“[(e)] The Director General of the National Economic and Development 
Authority;] 
“(G) THE CHAIRPERSON OF THE COOPERATIVE DEVELOPMENT 
AUTHORITY (CDA); 
“(H) THE 
PRESIDENT 
OF THE PHILIPPINE 
GUARANTEE 
CORPORATION; 
“(I) THE COMMISSIONER OF THE INSURANCE COMMISSION (IC); 
“(J) THE PRESIDENT OF THE PHILIPPINE CROP INSURANCE 
CORPORATION; 
“(K) A  REPRESENTATIVE  OF  A  NATIONAL  ORGANIZATION 
REPRESENTING AND DOMINATED BY MSMEs; 
“[(f)] (L) One (1) representative from the labor sector, to be nominated by 
accredited labor groups; 
“[(g)] (M) A representative from the private banking sector to serve 
[alternatively] ALTERNATELY between the [c]Chamber of [t]Thrift 


[b]Banks, and the Rural Banker’s Association of the Philippines 
(RBAP);  
“[(h)] (N) A representative of the microfinance nongovernment 
organizations (NGOs), DESIGNATED BY THE MICROFINANCE 
NGO REGULATORY COUNCIL;  
“[(i)] (O) A representative of the University of the Philippines-Institute for 
Small Scale Industries (UP-ISSI); [and]  
“[(j)] (P) The President of the Credit Information Corporation[.];  
“(Q) ONE (1) REPRESENTATIVE FROM THE WOMEN SECTOR 
DESIGNATED BY THE PHILIPPINE COMMISSION ON WOMEN; 
AND 
“(R) ONE (1) REPRESENTATIVE FROM THE YOUTH SECTOR 
DESIGNATED BY THE NATIONAL YOUTH COMMISSION. 
“(S) A REPRESENTATIVE FROM NONSTOCK SAVINGS AND LOAN 
ASSOCIATIONS DESIGNATED BY THE ALLIANCE OF NON-
STOCK SAVINGS AND LOAN INSTITUTIONS, INC. (ANSLI). 
“x x x.” 
  
SEC. 9. Section 7-B of the same Act, as amended, is hereby further amended to read as 
follows: 
“SEC. 7-B. Powers and Functions. – A. The MSMED Council shall have 
the following powers, duties and functions: 
 
 
 
“x x x; 
“d) To review the existing policies of government agencies that would affect 
the growth and development of MSMEs and recommend changes to the 
President and Congress through the Committee on Economic Affairs of the 
Senate and the Committee on [Small Business and Entrepreneurship] 
MICRO, SMALL AND MEDIUM ENTERPRISE Development of the House 
of Representatives, whenever deemed necessary. This shall include efforts 
to simplify rules and regulations, as well as review of the applicability and 
relevance of procedural and documentary requirements in the registration, 
financing, and other activities relevant to MSMEs the result shall be included 
in the annual report to be submitted to Congress;  
“x x x;  
“h) To promote the productivity and viability of MSMEs IN DTI’S TOP 
PRIORITY INDUSTRIES FOR DEVELOPMENT by way of directing and/or 
assisting relevant government agencies and institutions at the national, 
regional and provincial levels towards the: 
“x x x; 
“12) Through appropriate government agencies: 
“x x x; 
“f) Set-up new MSME NEGOSYO centers and revitalize already 
established MSME NEGOSYO centers to provide MSMEs in the regions 
easier access to services such as, but not limited to, the following: 
“x x x.” 


“B. ADDITIONAL FUNCTIONS OF THE MSMED COUNCIL. – AS 
PROVIDED FOR IN SECTION 10 OF REPUBLIC ACT NO. 10644, 
OTHERWISE KNOWN AS THE “GO NEGOSYO ACT”, THE MSMED 
COUNCIL SHALL HAVE THE FOLLOWING ADDITIONAL FUNCTIONS:  
“(A) COORDINATING AND OVERSIGHT BODY FOR THE MSME 
NEGOSYO CENTER. – THE MSMED COUNCIL, THROUGH THE DTI, SHALL 
ACT AS THE COORDINATING AND SUPERVISING BODY FOR ALL THE 
AGENCIES INVOLVED IN THE ESTABLISHMENT AND OPERATION OF 
THE MSME NEGOSYO CENTERS. FURTHER, THE MSMED COUNCIL 
SHALL MONITOR AND ASSESS THE PROGRESS OF THE NEGOSYO 
CENTERS, WHICH SHALL BE INCLUDED IN ITS ANNUAL REPORT 
SUBMITTED TO THE CONGRESS; 
“(B) PROVISION OF A COMPLIANCE GUIDE. – FOR EACH RULE OR 
GROUP OF RELATED RULES ISSUED BY ANY GOVERNMENT AGENCY 
FOR COMPLIANCE BY MSMES, THE COUNCIL SHALL PUBLISH 
COMPLIANCE GUIDELINES WHICH SHALL BE WRITTEN IN PLAIN 
LANGUAGE OR IN THE LOCAL DIALECT, IF NECESSARY. 
“THE COUNCIL SHALL PREPARE SEPARATE COMPLIANCE GUIDES 
COVERING GROUPS OR CLASSES OF SIMILARLY AFFECTED MSMES 
AND SHALL COOPERATE WITH INDUSTRY ASSOCIATIONS TO DEVELOP 
AND DISTRIBUTE SUCH COMPLIANCE GUIDES. THE PUBLICATION OF 
EACH COMPLIANCE GUIDE SHALL INCLUDE THE POSTING OF THE 
GUIDE IN AN EASILY IDENTIFIED LOCATION ON THE WEBSITE OF THE 
AGENCY, AND DISTRIBUTION OF THE GUIDE TO KNOWN INDUSTRY 
CONTACTS, SUCH AS SMALL ENTITIES, ASSOCIATIONS OR INDUSTRY 
LEADERS AFFECTED BY THE RULE. THE ISSUING GOVERNMENT 
AGENCY SHALL PUBLISH AND DISSEMINATE THE COMPLIANCE RULES 
WITHIN NINETY (90) DAYS FROM THE DATE OF ISSUANCE; 
“(C) CONDUCT OF RESEARCH ON WOMEN ENTREPRENEURSHIP. – 
THE COUNCIL SHALL CONDUCT RESEARCH TO SUPPORT WOMEN 
ENTREPRENEURSHIP 
INCLUDING, 
BUT 
NOT 
LIMITED 
TO 
ENTREPRENEURIAL BEHAVIOR, BARRIERS, PARTICIPATION AND 
CESSATION 
RATES, 
DISCRIMINATORY 
PRACTICES 
AND 
CONTRIBUTION TO THE NATIONAL ECONOMY AND GROWTH; 
“(D) POLICY FORMULATION ON WOMEN ENTREPRENEURSHIP. – THE 
COUNCIL 
SHALL 
PROVIDE 
POLICY 
DIRECTION 
TOWARDS 
RECOGNIZING WOMEN’S PROPENSITY IN DOING BUSINESS AS WELL 
AS ESTABLISH LINKAGES THAT WILL ENABLE MORE OPPORTUNITIES 
FOR WOMEN TO ENGAGE IN ENTREPRENEURSHIP; AND 
“(E) DEVELOPMENT OF ENTREPRENEURIAL EDUCATION AND 
TRAINING. – THE MSMED COUNCIL SHALL DEVELOP, IN COORDINATION 
WITH THE DEPARTMENT OF EDUCATION, TESDA AND CHED, A COURSE 
CURRICULUM OR TRAINING PROGRAM IN ENTREPRENEURSHIP THAT 
WILL PROMOTE ENTREPRENEURIAL CULTURE AND COMPETENCE. 
ENTREPRENEURSHIP SHALL BE INTEGRATED IN THE CURRICULUM OF 
EDUCATIONAL AND TRAINING INSTITUTIONS IN ALL LEVELS.” 
“THE CHED SHALL HAVE A PROGRAM WHEREIN GRADUATING 
COLLEGE  AND 
POSTGRADUATE STUDENTS SHALL 
ASSIST 


ENTREPRENEURS IN MAKING BANKABLE FEASIBILITY STUDIES AS 
FULFILLMENT OF THEIR ACADEMIC REQUIREMENTS.” 
 
SEC. 10. A new subsection is hereby inserted after Section 7-B of the same Act, as 
amended, and numbered as Section 7-C to read as follows:  
“SEC. 7-C. CITY, MUNICIPALITY, AND BARANGAY MSMED COUNCIL. - 
THERE SHALL BE CREATED A MSMED COUNCIL IN EVERY LOCAL 
GOVERNMENT UNIT WHICH SHALL HAVE THE AUTHORITY TO 
PROPOSE POLICIES THAT ARE GEARED TO ASSIST MSMEs IN THE 
AREAS OF PRODUCTIVITY ENHANCEMENT, MARKETING, ACHIEVING 
SUSTAINABILITY BY EXTENDING CREDIT TO CUSTOMERS, AND 
IMPLEMENTING EFFICIENT LOAN COLLECTION SYSTEMS, AMONG 
OTHER STRATEGIES.  
“THE LOCAL MSMED COUNCIL, IN THE CASE OF A CITY OR 
MUNICIPALITY, SHALL BE COMPOSED OF THE CITYOR MUNICIPAL 
BUSINESS PERMIT AND LICENSING OFFICER AS CHAIRPERSON, THE 
PRESIDENT OF THE ASSOCIATION OF BARANGAY CAPTAINS, THE 
PRESIDENT OF THE SANGGUINIANG KABATAAN FEDERATION, THE 
TOURISM OFFICER, AND THE CITY ORMUNICIPAL AGRICULTURIST OR 
THE CITY PLANNING OFFICER.  
“THE BARANGAY MSMED COUNCIL SHALL BE COMPOSED OF THE 
PUNONG BARANGA Y AS CHAIRPERSON, THE SANGGUNIANG 
KABATAAN CHAIRPERSON, A REPRESENTATIVE OF THE LADIES’ 
BRIGADE OR LADIES’ SECTOR, A REPRESENTATIVE OF THE 
BARANGAY PUBLIC SAFETY OFFICE, AND A REPRESENTATIVE OF THE 
SENIOR CITIZENS.  
“TO ENSURE THEIR CONTINUED FINANCIAL VIABILITY, THE CITY, 
MUNICIPAL, AND BARANGAY MSMED COUNCILS SHALL COORDINATE 
AND FORMULATE MEASURES TO ENSURE OPERATIONAL AND 
FINANCIAL VIABILITY WITHIN THEIR TERRITORIAL JURISDICTION, 
TAKING INTO CONSIDERATION THE RELEVANT FACTORS AFFECTING 
THE CAPACITIES OF THE MSMEs.”  
SEC. 11. Section 8 of the same Act, as amended, is hereby further amended to read as 
follows:  
“SEC. 8. Designation of the Bureau of Micro, Small and Medium Enterprise 
Development as Council Secretariat. – x x x:  
“1) to prepare, in coordination with local government units and/or 
associations of local government officials, and recommend annual as well 
as medium-term MICRO, small and medium enterprise development plans 
for approval of the Council;  
“x x x;  
“3) to assist the Council in coordinating and monitoring MICRO, small and 
medium enterprise policies and programs and activities of all government 
agencies with respect to MICRO, small and medium enterprises;  
“4) to prepare, collate and integrate all inputs to the Council’s yearly report 
on the status of MICRO, small and medium enterprises in the country;  


 “x x x.”  
SEC. 12. Section 11 of the same Act, as amended, is hereby further amended to read as 
follows:  
“SEC. 11. Creation of THE Small Business [Guarantee and Finance] 
Corporation. – There is hereby created a body corporate to be known as the 
Small Business [Guarantee and Finance] Corporation, hereinafter referred to 
as the [Small Business Corporation (SB Corporation)] SB CORPORATION, 
which shall be charged with the primary responsibility of implementing 
comprehensive policies and programs to assist MSMEs in all areas, including 
but not limited to finance and information services, training and marketing.”  
 
SEC. 13. Section 11-A of the same Act, as amended, is hereby further amended to read 
as follows: 
“SEC. 11-A. Composition of the Board of Directors and its Powers. – The 
SB Corporation [corporate powers shall be vested on] SHALL HAVE a Board 
of Directors composed of [eleven (11)] THIRTEEN (13) members which shall 
include the following: 
“a) The Secretary of Trade and Industry , WHO SHALL ACT AS 
CHAIRPERSON OF THE BOARD UNTIL SUCH TIME THAT THE 
PRESIDENT OF THE PHILIPPINES SHALL HAVE APPOINTED THE 
CHAIRPERSON OF THE BOARD FROM AMONG ITS MEMBERS; 
“b)  The Secretary of Finance; 
“C) THE PRESIDENT OF THE GOVERNMENT SERVICE INSURANCE 
SYSTEM (GSIS); 
“D) THE PRESIDENT OF THE SOCIAL SECURITY SYSTEM (SSS); 
“[c] E) A private sector representative to be appointed by the President OF 
THE PHILIPPINES upon the recommendation of the MSMED Council; 
“[d] F) Seven (7) representatives of the SB Corporation common stock 
shareholders who shall be elected based on proportional distribution, in 
accordance with Section 24 of the Corporation Code; and 
“[e)] G) The president of the SB Corporation as  ex-officio member and to 
serve as vice [chairman] CHAIRPERSON of the Board. 
“The President OF THE PHILIPPINES shall appoint the [chairman] 
CHAIRPERSON of the Board from among its members. 
“All members of the Board so appointed, except for the ex-officio members, 
shall serve for a term of three (3) years [without reappointment.] AND MAY BE 
REAPPOINTED TO ANOTHER TERM UNLESS EARLIER REVOKED. IF THE 
TERM OF THE INCUMBENT MEMBER HAS EXPIRED, THE MEMBER 
SHALL CONTINUE TO FUNCTION IN A HOLDOVER CAPACITY UNTIL A 
REPLACEMENT HAS BEEN APPOINTED AND QUALIFIED. [The] ANY 
person [so] appointed to replace a member who has resigned, died, or been 
removed for cause shall serve only for the unexpired portion of the term. 
“The Board of Directors shall have, among others, the following specific 
powers and authorities: 


  “x x x; and 
“f) [Notwithstanding the provisions of Republic Act No. 6758 and 
Compensation Circular No. 10, Series of 1989 issued by the Department of 
Budget and Management, the Board shall have the authority to p]Provide for 
the organizational structure, [and] staffing pattern [of SB Corporation and to 
extend to the employees and personnel thereof salaries, allowances and fringe 
benefits similar to those extended to and currently enjoyed by employees and 
personnel of other government financial institutions.] AND COMPENSATION 
OF EMPLOYEES AND PERSONNEL OF THE SB CORPORATION, FOR 
SUBMISSION TO THE GOVERNANCE COMMISSION FOR GOVERNMENT-
OWNED AND CONTROLLED CORPORATIONS (GCG).” 
 
SEC. 14. Section 11-B of the same Act, as amended, is hereby further amended, to 
read as follows: 
“SEC. 11-B.  Corporate Structure and Powers.  – “A. The SB Corporation 
shall: 
“x  x  x. 
“B. For this purpose, the SB Corporation [subject to compliance with the 
rules and regulations to be issued by the Bangko Sentral ng Pilipinas (BSP) 
and the Securities and Exchange Commission,] shall have the following 
functions and duties: 
“a) Source and adopt development initiatives for globally competitive 
MSMES in finance and business technologies; 
“b) [To] [e]Extend all forms of financial assistance, EXCEPT GRANTS 
AND SUBSIDIES, to eligible MSMEs[.], AND ALLOW RETAIL LENDING IN 
AREAS WHERE PRIVATE BANKS ARE NOT ABLE TO SERVE, SUBJECT 
CONSULTATION WITH PRIVATE BANKS. THE SB Corporation may also 
engage in wholesale lending. The SB Corporation shall be given two (2) 
years from the effectivity of this Act to comply with this requirement; 
“c) [Guarantee loans obtained by qualified MSMEs under such 
terms and conditions adopted by the SB Corporation Board of 
Directors;] ESTABLISH AN ENTERPRISE REHABILITATION FUND FOR 
CALAMITY-STRICKEN MSMEs NOT TO EXCEED FIVE HUNDRED 
MILLION PESOS (P500,000,000.00) AS PART OF 
THE SB 
CORPORATION’S CAPITALIZATION BY THE NATIONAL GOVERNMENT; 
“x xx; 
“f) Apply for, receive and accept grants and donations from sources 
within and outside the country; [and] 
“g) Hold, own, purchase, acquire, sell, mortgage, dispose or 
otherwise invest or re-invest in stocks, bonds, treasury bills, debentures, 
securities and similar forms  of  indebtedness  of  the 
government,  
its  agencies  and instrumentalities or any government financial institution[.]; 
AND 
“H) SUBMIT AN ANNUAL REPORT TO THE MSMED COUNCIL, THE  
CONGRESS  OF  THE  PHILIPPINES  AND  THE  GCG  ON  THE 
PERFORMANCE AND FINANCIAL CONDITION OF THE CORPORATION. 


“THE SB CORPORATION SHALL BE EXEMPT FROM SECURING 
 PRIOR BSP AUTHORIZATION FOR ENGAGING IN QUASI-BANKING 
ACTIVITIES AND SHALL NOT BE SUBJECT TO BSP SUPERVISION AND 
REGULATION FOR SUCH ACTIVITIES.” 
 
SEC. 15. A new subsection is hereby inserted after Section  11-B of the same Act, as 
amended, and numbered as Section 11-C to read as follows: 
“SEC. 11-C. STRATEGIC MANAGEMENT OF THE SB CORPORATION. – 
THE BOARD OF THE SB CORPORATION, THROUGH ITS CHAIRMAN, 
SHALL BE FULLY RESPONSIBLE AND ACCOUNTABLE FOR THE 
PERFORMANCE OF THE CORPORATION’S MANDATE. TO ENSURE THIS, 
THE BOARD SHALL BE CONSTITUTED AS A MANAGING BOARD, LED BY 
ITS CHAIRMAN, TO CONCEPTUALIZE THE STRATEGIC PLANS AND 
POLICIES OF THE CORPORATION. 
“THE SB CORPORATION SHALL ADOPT A BALANCED SCORECARD 
APPROACH, SUBJECT TO THE REVIEW AND APPROVAL OF THE 
GOVERNANCE 
COMMISSION 
FOR 
GOCCs, 
IN 
ITS 
STRATEGIC 
MANAGEMENT 
TO 
ENABLE 
IT 
TO 
MANAGE 
ITS 
FINANCIAL 
PERFORMANCE WHILE PURSUING THEIR PUBLIC POLICY OBJECTIVES 
OF SUPPORTING MICRO, SMALL AND MEDIUM ENTERPRISES 
DEVELOPMENT.” 
 
SEC. 16. 
Section 12 of the same Act, as amended, is hereby further amended to read 
as follows: 
“SEC. 12. Capitalization and Funding of the SB Corporation. – The SB 
Corporation shall have an authorized capital stock of [Ten] FIFTY billion pesos 
[(P10,000,000,000.00)] (P50,000,000,000.00), WHICH 
SHALL 
BE 
DIVIDED 
INTO 400,000 COMMON SHARES AND 100,000 PREFERRED SHARES WITH 
A PAR VALUE OF ONE HUNDRED PESOS (P100.00) PER SHARE. The initial 
capital of One billion pesos (P1,000,000,000.00) [shall be] established from a pool 
of funds [to be contributed] in the form of equity investments in common stock by 
the Land Bank of the Philippines (LBP), the Development Bank of the Philippines 
(DBP), in the amount of Two hundred million pesos (P200,000,000.00) each[. The] 
AND ALSO BY THE Social Security System (SSS) and the Government Service 
Insurance System (GSIS) [shall also set aside] IN THE AMOUNT OF Two hundred 
million pesos (P200,000,000.00) each [for the SB Corporation] SHALL REMAIN 
PART OF THE CAPITALIZATION OF SB CORPORATION. [Authorized capital 
stock of the [s]Small [b]Business [c]Corporation shall be divided into 80,000,000 
common shares and 20,000,000 preferred shares with a par value of One hundred 
pesos (P100.00) per share: Provided, That the common shares which have been 
issued, including those issued against the assets of the KKK Guaranty Fund 
consolidated under the [s]Small [b]Business [c]Corporation by virtue of Executive 
Order No. 233, Series of 2000 and Executive Order No. 19, Series of 2001 and 
including those already subscribed, shall [form] LIKEWISE REMAIN part of the 
capitalization of the corporation: Provided, further, That holders of preferred shares 
issued under [Republic Act No.] RA 6977, as amended, shall have the option to 
convert the same into common shares.  Additional equity funding shall come from 
trust  placements of excess and unused funds of existing government agencies, 
bilateral and multilateral official  development assistance funds, subscriptions from 
government 
owned 
or 
controlled 
corporations 
AND 
THE 
NATIONAL 


GOVERNMENT 
THROUGH 
THE 
DEPARTMENT 
OF 
BUDGET 
AND 
MANAGEMENT (DBM), and investments of private financial institutions and 
corporations: Provided, finally, That any investment from the private sector shall 
only be in the form of preferred shares.   
“NATIONAL GOVERNMENT EQUITY TO THE CORPORATION SHALL 
BE INCLUDED IN THE ANNUAL GENERAL APPROPRIATIONS ACT.                        
“[To allow for capital build-up, SB Corporation shall be given a five (5) year 
grace period on dividend commitments beginning on the date of effectivity of 
this amendment. Thereafter, it] THE SB CORPORATION may [only] declare 
as dividend not more than thirty percent (30%) of its net income and the rest 
withheld as retained earnings.” 
 
SEC. 17. Section 13 of the same Act, as amended, is hereby deleted. 
“SEC. 13. The SB Corporation shall NOT be subject to the supervision and 
examination of the Bangko Sentral ng Pilipinas taking into consideration its 
developmental objectives.” 
 
SEC. 18. 
Section 14 of the same Act, as amended, is hereby renumbered as Section 
13, and further amended to read as follows: 
“SEC. 14. Venture Capital and Micro Finance Trust Fund. – The SB 
Corporation may set aside an amount of money to encourage the setting up of 
a venture capital and micro finance trust fund for the purpose of promoting 
AVAILABLE business opportunities [available] to THE MSME sector. The 
Venture Capital Fund shall be used mainly for venture capital finance especially 
in technology-oriented industries. The micro finance trust fund shall be used to 
provide collateral-free fixed and working capital loans to micro and small 
enterprises run by those emerging out of poverty. THE INITIAL AMOUNT OF 
AT LEAST TEN PERCENT (10%) OF THE ADDITIONAL EQUITY 
CONTRIBUTION 
OF 
THE 
NATIONAL 
GOVERNMENT 
TO 
THE 
CAPITALIZATION OF THE SMALL BUSINESS CORPORATION BUT NOT 
MORE THAN FIVE HUNDRED MILLION PESOS (P500,000,000.00) SHALL 
BE APPROPRIATED TO FUND THE VENTURE CAPITAL AND MICRO 
FINANCE TRUST FUND.” 
 
SEC. 19. 
Section 15 of the same Act, as amended, is hereby further amended to read 
as follows: 
“SEC. 15. Mandatory Allocation of Credit Resources to Micro, Small and 
Medium Enterprises. –For [the] AN ADDITIONAL period of ten (10) years from 
the date of the effectivity of this amendatory Act, all lending institutions [as 
defined under Bangko Sentral ng Pilipinas rules], whether public or private, 
shall set aside at least [eight percent (8%) for micro and small enterprises and 
at least two percent (2%) for medium enterprises] TEN PERCENT (10%) of 
their total loan portfolio based on their balance sheet as of the end of the 
previous quarter FOR MICRO, SMALL AND MEDIUM ENTERPRISES, and 
make it available for MSME credit as herein contemplated: PROVIDED, THAT 
A MAXIMUM OF THREE PERCENT (3%) THEREOF SHALL BE THE 
ALLOCATION FOR MEDIUM ENTERPRISES.  
“Compliance of this provision shall be: 
“a) actual extension of loans to eligible MSMEs; or 


“x x x; or 
“f) [subscribe/] SUBSCRIPTION OR purchase of liability instruments as 
may be offered by the SB Corporation. THE SAME SHALL NOT BE DEEMED 
AS QUASI-BANKING OPERATIONS, AND SHALL NOT REQUIRE A QUASI-
BANKING LICENSE FROM THE BSP; OR 
“(G) EXTENSION OF LOANS TO MSME VALUE CHAIN ACTORS WHO 
ALLOW MSMEs TO PARTICIPATE IN ORGANIZED OR FORMAL VALUE 
CHAINS. VALUE CHAIN ACTORS INCLUDE, AMONG OTHERS, TRADERS, 
SUPPLIERS, PROCESSORS, AGGREGATORS WHO CONDUCT LINKED 
SEQUENCE OF VALUE ADDING ACTIVITIES INVOLVED IN BRINGING A 
PRODUCT TO FINAL CONSUMERS; OR 
“H) SUSTAINABLE FINANCE FOR PROJECTS OR ACTIVITIES THAT 
WILL BENEFIT MSMEs; OR 
“I) INNOVATION DEVELOPMENT CREDIT FOR PURPOSES OF 
DEVELOPING NEW TECHNOLOGIES, PRODUCT 
INNOVATION, 
PROCESS INNOVATION, 
ORGANIZATIONAL INNOVATION, 
AND 
MARKETING INNOVATION IN MSMEs; OR 
“J) FINANCING  FOR  COMPANIES THAT  MAINTAIN  AND 
OPERATE ELECTRONIC 
PLATFORMS THAT FACILITATE  VALUE 
CHAIN  AND  SUPPLY  CHAIN  FINANCING  TRANSACTIONS  WITH 
MSMEs, 
MSME 
DIGITALIZATION, 
OR 
WHICH 
OFFER/PROVIDE 
TECHNOLOGY-BASED SOLUTIONS TO MSMEs FOR PURPOSES OF 
PROMOTING E-COMMERCE, INCLUDING ALTERNATIVE DATA CREDIT 
SCORING,  DIGITAL  ACCOUNTING  AND  BOOKING  APPLICATIONS, 
PRODUCTION, 
MARKETING AND DISTRIBUTION, 
AND 
TAX 
COMPLIANCE ONLINE TOOLS; OR 
“K) INVESTMENTS IN MSMEs BY WAY OF PURCHASE OF THEIR 
SECURITIES THROUGH AN ORGANIZED MARKET, INITIAL PUBLIC 
OFFERING, FOLLOW-ON OFFERING, OR THROUGH REGISTERED 
CROWDFUNDING 
INTERMEDIARIES, INCLUDING INVESTMENT IN THE 
EQUITIES OF MSME STARTUPS; OR 
“L) LOANS TO, OR INVESTMENTS IN FINANCIAL INSTITUTIONS 
THAT 
PROVIDE 
SUPPLY 
CHAIN 
FINANCING, 
VALUE 
CHAIN  
FINANCING,  TRADE  FINANCING  OR  GUARANTEES  FOR MSMEs. 
“MSME FINANCING THAT MEETS THE ELIGIBILITY CRITERIA 
UNDER RA 11901, OR “THE AGRICULTURE, FISHERIES AND RURAL 
DEVELOPMENT FINANCING ENHANCEMENT ACT OF 2022” AND RA 
11293, OR THE “PHILIPPINE 
INNOVATION ACT” SHALL 
BE 
RECOGNIZED AS COMPLIANCE WITH THE MANDATORY CREDIT 
REQUIREMENT UNDER THESE LAWS. 
“ALL LENDING INSTITUTIONS SHALL ACTIVELY SUPPORT AND 
PARTICIPATE IN PROGRAMS THAT FORM PART OF THE PRIORITY 
INITIATIVES UNDER THE NATIONAL STRATEGY FOR FINANCIAL 
INCLUSION 2022 TO 2028 THAT PROMOTE ACCESS TO FINANCE FOR 
MSMEs  WHILE  ENSURING  THAT  THEY  HAVE  ADEQUATE  AND 
EFFECTIVE CREDIT RISK MANAGEMENT SYSTEMS. 
“LENDING INSTITUTIONS SHALL ALSO ADOPT CASH FLOW-BASED 
LENDING WHICH PLACES EMPHASIS ON THE CAPACITY TO PAY OF 
AN MSME RATHER THAN COLLATERAL. WHEN GRANTING MSME 
CREDIT, LENDING INSTITUTIONS SHALL UTILIZE SIMPLIFIED LOAN 


APPLICATION FORMS AND REQUIRE STREAMLINED DOCUMENTARY 
REQUIREMENTS.  
LENDING INSTITUTIONS SHALL ALSO  CONSIDER  ALTERNATIVE  
DATA  AS  WELL  AS  AVAILABLE CREDIT RISK INFORMATION IN 
DETERMINING 
AN MSME BORROWER’S CAPACITY TO PAY. FOR 
PURPOSES OF MITIGATING CREDIT RISK, LENDING INSTITUTIONS 
SHALL ACCEPT MOVABLE COLLATERAL AS A FORM OF CREDIT 
RISK MITIGANT FOR MSME EXPOSURES, IN ADDITION TO PHYSICAL 
COLLATERAL (LIKE REAL ESTATE), FINANCIAL GUARANTEES, AND 
OTHER INSTRUMENTS. 
“The Bangko Sentral ng Pilipinas, AND THE SECURITIES AND 
EXCHANGE COMMISSION, IN CONSULTATION WITH THE MSMED 
COUNCIL AND THE SECRETARY OF TRADE AND INDUSTRY, shall 
formulate rules for the effective implementation of this provision: Provided, 
That the purchase of government notes, securities and other negotiable 
instruments shall not be deemed compliance with the foregoing provisions: 
Provided, further, That the Bangko Sentral ng Pilipinas AND THE 
SECURITIES AND EXCHANGE COMMISSION, IN CONSULTATION WITH 
ALL STAKEHOLDERS,  shall establish [an] A MEANINGFUL incentive 
[program] SYSTEM to encourage [lending to micro, small and medium 
industries beyond the mandatory credit allocation to said enterprises,] 
COMPLIANCE WITH THIS PROVISION, such as possible reduction in bank’s 
reserve requirement[.]: PROVIDED, FINALLY, THAT THE BANGKO 
SENTRAL NG PILIPINAS SHALL ALIGN ITS REGULATIONS ON THE 
PENALTIES FOR BANKS AND OTHER ENTITIES, FOR NONCOMPLIANCE 
WITH THE PROVISION FOR MANDATORY LENDING. 
“The MSMED Council shall set up the appropriate systems to monitor all 
loan applications of MSMEs in order to account for the absorptive capacity of 
the MSME sector. EACH LENDING INSTITUTION SHALL DESIGNATE A 
CHIEF COMPLIANCE OFFICER WHO WILL PREPARE AND SIGN THE 
REPORT 
ON 
COMPLIANCE 
AND 
NONCOMPLIANCE 
WITH 
THE 
MANDATORY CREDIT ALLOCATION, FOR SUBMISSION TO THE BANGKO 
SENTRAL NG PILIPINAS IN THE CASE OF BANKS, AND THE SECURITIES 
AND EXCHANGE COMMISSION IN THE CASE OF NON-BANK FINANCIAL 
INTERMEDIARIES. The Bangko Sentral ng Pilipinas, IN THE CASE OF 
BANKS, AND THE SECURITIES AND EXCHANGE COMMISSION, IN THE 
CASE OF NON-BANK FINANCIAL INTERMEDIARIES, shall furnish to the 
MSMED Council on a quarterly basis comprehensive reports on the [banks’] 
LENDING ENTITY’S compliance[,] AND noncompliance [and penalties of] 
WITH the above provisions on the mandatory credit allocation for MSMEs[.], 
AND SHALL SUBMIT AN ANNUAL REPORT, SIGNED BY AN OFFICER 
WITH THE RANK OF AT LEAST A MANAGING DIRECTOR, ON THE 
AMOUNTS OF THE PENALTIES FOR NONCOMPLIANCE WITH THE 
MANDATORY LENDING PROVISION OF THIS ACT.   
“ALL BANKS SHALL PROVIDE ACCESS TO DEPOSIT ACCOUNTS, 
SUCH 
AS 
SAVINGS, 
CHECKING 
AND 
DEBIT 
ACCOUNTS, 
TO 
REGISTERED MSMEs. FINANCIAL TECHNOLOGY SHALL BE PROVIDED 
TO MSMEs TO ENSURE THEIR FINANCIAL INCLUSION.  


“ALL LENDERS SHALL REPORT CREDIT INFORMATION AND 
TRANSACTIONS OF MSMEs TO A NATIONAL CREDIT REGISTRY TO 
MONITOR PROPER COMPLIANCE AND EFFICIENT IMPLEMENTATION.  
“FOR 
EFFICIENT 
IMPLEMENTATION 
AND 
OPERATION, 
COOPERATIVES EXCEPT COOPERATIVE BANKS AND INSURANCE 
COOPERATIVESSHALL BE UNDER THE SOLE SUPERVISION AND 
EXAMINATION OF THE COOPERATIVE DEVELOPMENT AUTHORITY 
(CDA); ALL OTHER FINANCIAL ENTITIES, CORPORATIONS AND 
FINANCIAL 
INTERMEDIARIES, 
SUCH 
AS 
NON-GOVERNMENT 
ORGANIZATIONS, FINANCING COMPANIES, NON-STOCK SAVINGS AND 
LOAN 
ASSOCIATIONS, 
MICROFINANCE 
NON-GOVERNMENT 
ORGANIZATIONS,AND LENDING INVESTORS SHALL BE UNDER THE 
SECURITIES AND EXCHANGE COMMISSION (SEC); BANKS SHALL BE 
UNDER THE BANGKO SENTRAL NG PILIPINAS (BSP); AND INSURANCE 
COMPANIES SHALL BE UNDER THE INSURANCE COMMISSION (IC).  
“FOR CLARITY, COOPERATIVE BANKS SHALL BE UNDER THE 
SUPERVISION AND EXAMINATION OF THE CDA AND BSP; WHILE 
INSURANCE COOPERATIVES SHALL BE UNDER THE SUPERVISION AND 
EXAMINATION OF THE CDA AND INSURANCE COMMISSION (IC).  
“x x x.” 
 
SEC. 20. Section 18 of the same Act, as amended, is hereby renumbered as Section 17, 
and further amended to read as follows:  
“SEC. 18. Congressional Oversight Committee. – To monitor and oversee 
the implementation of this Act, there shall be a Congressional Oversight 
Committee on Micro, Small and Medium Enterprise Development (COC-
MSMED) composed of the chairpersons of the Senate Committee on 
Economic Affairs and the House Committee on [Small Business and 
Entrepreneurship 
Development] 
MICRO, 
SMALL 
AND 
MEDIUM 
ENTERPRISE 
DEVELOPMENT 
as 
chairperson 
and 
co-chairperson, 
respectively; x x x .”  
 
SEC. 21. Section 19 of the same Act, as amended, is hereby renumbered as Section 18, 
and further amended, to read as follows: 
“SEC. 19. Penal Clause. – PENALTIES SHALL BE IMPOSED ON THE 
VIOLATION OF THE FOLLOWING PROHIBITED ACTS: 
“a) The [Bangko Sentral ng Pilipinas] BSP IN THE CASE OF 
BANKS, AND THE SEC IN THE CASE OF NON-BANK FINANCIAL 
INTERMEDIARIES,  shall  impose  administrative  sanctions  and  other 
penalties on  the  lending  institutions for  non[-]compliance  with  THE 
[provisions] MANDATORY LENDING AS PROVIDED UNDER SECTION 14 
of this Act [including a fine of not less than Five hundred thousand pesos 
(P500,000.00)]. 
PENALTIES 
ON 
NONCOMPLIANCE 
OR 
UNDERCOMPLIANCE SHALL BE COMPUTED AT ONE-HALF OF ONE 
PERCENT (0.5%) OF NONCOMPLIANCE OR UNDERCOMPLIANCE, OR 
AT RATES PRESCRIBED BY THE BSP MONETARY BOARD. 
“Penalties on noncompliance shall be directed to the development of the 
MSME sector. Ninety percent (90%) of the penalties collected [should] 


SHALL go to the MSMED Council Fund, while the remaining ten percent 
(10%) [should] SHALL be [given] REMITTED to the BSP, THE SEC, OR THE 
APPROPRIATE AGENCY 
THAT 
EXERCISES 
REGULATORY 
JURISDICTION OVER SUCH LENDING ENTITY, to cover for administrative 
expenses. 
“THE CHAIRPERSON OF THE MSMED COUNCIL SHALL SUBMIT  
TO  THE  CONGRESS  OF  THE  PHILIPPINES  AN  ANNUAL REPORT 
ON THE STATUS OF THE PENALTIES REMITTED INCLUDING ITS  
UTILIZATION  IN  RELATION  TO  THE  IMPLEMENTATION  OF 
SERVICES  TO  MSMEs  IN  THE  AREAS  OF  CAPACITY  BUILDING, 
TECHNOLOGY INFORMATION, 
INFORMATION 
COLLECTION 
AND 
DISSEMINATION, 
AND 
OTHER 
INTERVENTIONS 
FOR 
MSME 
DEVELOPMENT, GROWTH AND SUSTAINABILITY. 
“b) EXCEPT FOR SECURITIES COVERED UNDER RA 8799, OR 
“THE SECURITIES REGULATION CODE”, ENTITIES SHALL SECURE 
THE NECESSARY APPROVAL OF THE SEC PRIOR TO RECEIVING 
INVESTMENTS AS WELL AS GIFTS, ITEMS OR OTHER COMMODITIES, 
EITHER IN THE FORM OF CASH OR ITS EQUIVALENT CASH VALUE IN 
CONSIDERATION OF RETURN OF PROFIT OR BENEFIT COMING FROM 
MORE THAN TWENTY (20) INDIVIDUALS. THE PRESIDENT, MANAGER 
OR  OFFICER  OF  ANY  ENTITY  WHO  FAILS  TO  SECURE  SUCH 
APPROVAL SHALL SUFFER THE PENALTY OF IMPRISONMENT OF 
NOT LESS THAN THIRTY (30) DAYS BUT NOT MORE THAN ONE 
HUNDRED EIGHTY (180) DAYS, OR A FINE OF NOT LESS THAN TEN 
THOUSAND PESOS (₱10,000.00) BUT NOT MORE THAN ONE HUNDRED 
THOUSAND PESOS (₱100,000.00) OR BOTH, AT THE DISCRETION OF 
THE COURT.” 
 
SEC. 22. Implementing Rules and Regulations (IRR).  –  The Department of Trade and 
Industry, through the Bureau of Micro, Small and Medium Business Development and in 
consultation with the Bangko Sentral ng Pilipinas and other concerned government 
agencies, nongovernment organizations and private sector agencies involved in the 
promotion of MSMEs, shall formulate the implementing rules and regulations (IRR) 
necessary to implement the provisions of this Act within ninety (90) days from the 
approval of this Act: Provided, That the IRR shall be reviewed yearly:  Provided, further, 
That the IRR shall be approved by the MSMED Council. 
 
SEC. 23. 
Separability Clause.  –  The provisions of this Act are hereby declared to be 
separable. If any provision of this Act shall be held unconstitutional, the remainder of this 
Act not otherwise affected shall remain in full force and effect. 
 
SEC. 24. 
Repealing Clause.  –  All laws, executive orders, rules and regulations, or 
parts thereof inconsistent herewith are hereby repealed or modified accordingly. 
 
SEC. 25. 
Effectivity.  –  This Act shall take effect within fifteen (15) days from its 
publication in the Official Gazette or in a newspaper of general circulation. 
 
Approved,