Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

18% Congress
{First Regular Session

House Bill No. 0562

Introduced by HON. RODRIGO A. ABELLANOSA

EXPLANATORY NOTE

Micro, small, and medium enterprises (MSMEs) serve as the backbone of the
Philippine economy. In 2015, the Philippine Statistics Authority accounted for 99.5%
of existing establishments as MSMEs with mic:o-enterpnises nearly 30% of the total
jobs from the sector.

‘The biggest challenge for these players to date, is access to financing. Credit may be
available to them but interest rates are just too high for micro-enterprises to be
competitive and still turn a profit .

This bill seeks to institutionalize the "Pondo sa Pagbabago at Pag-asenso”, or "P3
Fund” recently introduced by the Small Business Corporation upon the directive of
the President. The program offers access to co!leteral-free credit for qualified micro-
enterprises at interest rates lower than those offered by private micro-financing
institutions.

With the availability of cheap credit through :!:< P3 Fund, entrepreneurs are given
the opportunity to grow their business, compete not just locally but internationally,
and continue generating jobs for a greater number of Filipinos.

In view of the foregoing, passage of this Bill is earnestly sought.

(ud

RODRIGO A. ABELLANOSA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

18t Congress
First Regular Session

0562
House Bill No.

Introduced by HON. RODRIGO A. ABELLANOSA

AN ACT
PROVIDING A SOCIALIZED MICROFINANCING 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. Title. - This Act shall be known as the 'Pondo sa Pagbabago at
Pag-asenso" or the "P3 Act”.

‘SEC. 2. Declaration of Policy. — {t is the declared policy of the State to foster
national development, promote inclusive growth, and reduce poverty by promoting
the growth of micro, small, and medium enterprises (MSMEs) that 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 to east the constraints and challenges to MSMEs,
particularly on access to financing.

SEC. 3. Objectives. - The objectives of this Act are as follows:
(a) To provide an affordable, accessible and simple micro financing program for the
country's micro enterprises, especially those in the poorest populations. ;
(b) To provide a better alternative to the informal lenders or the so-called "5-6" money
lending system availed of by micro enterprises; and
(c)To bring down the interest rate at which micro finance is made available to micro
enterprises.

SEC. 4. Creation of the Pondo sa Pagbabago at Pag-asenso (P3). - There is
hereby created the "Pondo sa Pagbabago at Pag-asenso", hereinafter referred to as
the "P3 Fund”, which shall be lent out to qualified MSMEs under such terms and
conditions that will meet the purposes of this Act.


The beneficiaries of the "P3 Fund” shall be micro enterprises and
entrepreneurs including market vendors, agri-businessmen and members of
cooperatives, industry associations and cooperators.

‘The fund shali be primarily lent through conduit financial institutions to be
accredited for the purpose.

SEC. 5. Lead Implementing Agency. — The small Business Corporation (SB
Corp.), the financing arm of the Department of Trade and Industry (DTI), shalll be the
lead implementing agency for the "P3 Fund’. It shall handle the fund delivery to micro
enterprises through the following modes:

(a) Direct lending to micro enterprises;

(b) Wholesale lending to conduits, such as micro finance institutions (MFIs), rural
banks and credit cooperatives, which shall on-lend the fund to micro
enterprises; and

(c)Provision of guarantees to loans granted by the banks to qualified P3 beneficiaries.

SEC. 6. Features of the "P3 Fund’. - The "P3 Fund" shall have the following
features:

(a) The components of the "P3 Fund” shall be:

(1) Loan fund; and

(2) Guarantee fund of not more than twenty-five percent (25%) of the total loan
exposure;

(b) The foanable amount for individual loans, and the interest rate to the
conduits and to the end beneficiaries shalll be set and regularly reviewed by the Micro,
Small and Medium Enterprise Development (MSMED) Council: Provided, That the
interest rate shall be lower than the prevailing interest rate charged by the MFls. The
interest earnings shall accrue to the "P3 Fund"; and

(c) There shall be no collateral requirement from the P3 loan beneficiaries.

SEC. 7. Policy Oversight Function. - The MSMED Council shall monitor the
utilization and disbursements of the "P3 Fund’. It shall submit to the President of
the Philippines and to Congress, through the Congressional Oversight Committee on
Micro, Small and Medium Enterprise Development (COC-MSMED), a yearly report
on the status of the "P3 Fund”.

‘SEC. 8. Appropriations. -The amount necessary to carry out the provisions of
this Act shall be charged against the appropriations released for the purpose under
the General Appropriations Act for the SB Corp. Thereafter, such sums as may be
necessary for the continued implementation of this Act shall be included in the
annual General Appropriations Act.

SEC. 9. impiementing Rules and Regulations. — Within sixty (60) days from the
approval of this Act, the DTI, in consultation with the concerned agencies, shall
formulate and promulgate the necessary rules and regulations to implement the
provisions of this Act. The implementing rules and regulations issued pursuant to
this section shall take effect thirty (30) days after its publication in at least two (2)
national newspapers of general circulation.

SEC. 10. Separability Clause. - If any part or section of this Act is declared
unconstitutional, such declaration shall not affect in any manner other parts or
sections hereof.


SEC. 11. Repealing Clause. — All laws, decrees, proclamations, issuances, or
ordinances that are contrary to or inconsistent with the provisions of this Act are
hereby amended, repealed or modified ingly.

SEC. 12. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the official gazette or in a newspaper of general circulation in the
Philippines.

Approved,