twentieth congress of the
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE 
S. No. 467
25 JUL 14 AiO 30
lU'La: .. ..u‘
Introduced by Senator Jinggoy Ejercito Estrada
AN ACT
A FINANCING
SA PAGBABAGO ATPAGASENsopPOG^AM^Ln63. JHR0UGH THE PONDO 
therefor 
o program and appropriating funds
EXPLANATORY NOTE
Data from the Department of Trade and Industry (DTT) show that out of the
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mill,on bus,ness enterprises operating around the country, 1,127,058 or 90 43%
are m,cro, 109,912 or 8.82% are small, and 4,763 or 0.38% are medium enterpnsesh
oreover, MSMEs collectively generated more than 6.35 million jobs or 66.97% of the 
country's total 6mployment2.
These figures illustrate the valuable impact of MSMEs to national economic 
deveopment. The sari-sari stores, backyard farms, home-based bakeries and 
carindena energize the domestic economies, provide stable livelihood and income to 
many Filipinos, and offer opportunities for a better quality of life.
A report by the International Finance Corporation from the World Bank Group 
provides that "inadequate access to finance is identified as the biggest obstacle” to 
s sustainable growth and job creation, topping all other issues such as 
corruption, infrastructure and taxes3. At the ASEAN level, the same constraints are
J 2^023 Philippine MSME Statistics. Accessed through: https:://www.dti.gov.ph/resources/msme-statistirc/
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observed in nrany jurisdictions, as a regionai policy report recommended the provision
rect credit support as a key policy intervention to support SME access to 
financing4.
This measure, which was reported out by the Senate Committee on Trade 
Commerce and Entrepreneurship during the 19* Congress, proposes the 
mstitutionalization of P3 or the Pondo sa Pagbabago at Pag-asenso Program under the 
Small Business Corporation (SBCorp) of the DTI. The P3 Program, which was launched 
■n 2017, was conceptualized to provide access to cheap and easy credit for 
entrepreneurs who want to infuse additional capital or expand their businesses 
w.thout voluminous documentary requirements or high-end collaterals. It offers' 
a ternative, low-cost interest (not exceeding 2.5% rate per month) micro-financing
options to business owners who would otherwise be lured into predatory "5-6" lending 
schemes or transacting with loan sharks.
Through the years, the P3 Program has annually received between P500 million 
0 one billion pesos in the annual General Appropriations Art. For the 2025 budget 
P500 million has been appropriated for the program, and provinces with high number
0 itidigents and incidence of poverty, MSMEs of indigenous people and sustainable 
rural livelihood are given priority.
In View Of ensuring the continued success and invaluable contribution of MSMEs 
to attaining inclusive development and prosperity, and eradicating poverty, the 
passage of this legislation is hereby recommended.
^/JlNi^GOY EJERCITO ESTRADA


twentieth congress of the
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
‘J! I
25 JUL 14 A10 30
SENATE
S. No. 467
Introduced by Senator Jinggoy Ejercito Estrada
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AN ACT
pPR“FGORN;?crOEANUDRSSMTLLBE^NT«^^^^^^^^^
SA PAGBABAGO ATPAGASENSOPRoar/M^Ln65. n™R°UGH THE P0NDO 
THEREFOR 
2»ENSO PROGRAM AND APPROPRIATING FUNDS
angrZCt^sembl^:Senate ^thS H°USe of RePresentatlves of the Philippines in
Section 1, Shot me. - This Aa shaii be known as the -Pondo sa Pagbabago 
at Pag-asenso (P3) Act"
Sec, 2. Declaration of Policy. - It is the declared poiicy of the State to foster 
comprehensive nationai 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
en repreneurial 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;


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C) Reduce the interest rate at which financial services are made available to 
MSEs;
d) Encourage the development of entrepreneurship and the Micro, Small and 
Medium Enterprise (MSME) sector, particularly MSEs;
e) Support successful business recovery of MSEs following natural or man- 
made disasters; and,
f) Provide cash, technical, and administrative assistance to qualified MSEs.
Sec. 4. Rondo sa Pagbabago at Pag-asenso (P3) Program. - The Pondo sa
Pagbabago at Pag-asenso Program, hereinafter referred to as the "P3 Program", shall
assist MSEs in the form of: a) microfinance or credit; b) cash assistance; and c) 
capacity building.
Qualified end-borrowers of the P3 Program shall be MSEs defined in Republic
Act No. 6977, as amended, or the "Magna Carta for Micro, Small, and Medium 
Enterprises."
The P3 Program shall be accessible through the Small Business Corporation 
(SBCorp) and through accredited Partner Financial Institutions (PFIs) such as rural
banks, thrift banks, cooperatives with a license to lend, microfinance non-government 
organizations, or lending companies.
Sec. 5. MIcronnance or Credit Component of the P3 Program. -The SBCorp and
PFIs shall be guided by the following principles in the implementation of the 
Microfinance or Credit Component of the P3 program;
a) The loanable amount ceiling for individual loans shall be set initially at Two 
million pesos (Php 2,000,000.00) for direct lending and Three hundred 
thousand pesos (Php 300,000.00) for lending through accredited PFIs which 
are regularly reviewed by the Micro, Small and Medium Enterprise 
Development (MSMED) Council;
b) The interest rate shall not exceed one percent (1%) per month for direct
lending, and shall not exceed two and a half percent (2.5%) per month for 
lending through accredited PFIs;
c) There shall be no collateral requirement from the P3 Fund borrowers;
d) The lenders shall have a collection mechanism, whereby payments are made 
on a daily, weekly, or monthly basis, depending on the business income


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cycle. It shall be the duty of the lender to collect the loan principal and the 
interest payment from the borrower; and
e) Financial technology-enabled systems and processes shall be utilized In the 
implementation of the P3 Program. Disbursements shall use digital forms of 
payment for both the disbursement of loan proceeds by the lenders, and 
the recurring loan payments by the borrowers.
Sec. 6. Lead Implementing Agency. -The SBCorp, as the financing arm of the
Department of Trade and Industry (DTI), shall be the lead implementing agency of 
the P3 Program.
The SBCorp shall handle all fund deliveries to MSEs through the following 
modes:
a) Direct lending - The SBCorp shall prioritize underserved or unserved areas 
and industries, or those not adequately and effectively served by PFIs, 
includrng provinces where poverty incidence remains high based on official 
poverty statistics from the Philippine Statistics Authority (PSA); and
b) Lending through accredited PFIs.
The SBCorp may allocate up to five percent (5%) of the total loans disbursed 
for the period, sourced from the accumulated funding for the P3 Program to cover its 
annual administrative and operating expenses which shall include the salaries of 
regular plantilla personnel involved in the implementation of the P3 Program.
Sec. 7. Cash Assistance and Capacity Building Components of the P3 Program.
- The SBCorp, in consultation with the DTI's Bureau of Micro, Small, and Medium 
Enterprise Development (BMSMED), National Anti-Poverty Commission (NAPC), and
the Bangko Sentral ng Pilipinas (BSP), shall develop a cash assistance program 
exclusively for MSEs in need of capital.
The SBCorp shall provide MSEs under the Capacity Building Component with 
free technical and administrative support, including but not limited to, product 
development, skills and leadership training, packaging and design, quality control, 
market promotion, client or supplier matching, and cash literacy and planning.
The SBCorp shall be guided by the following principles in the implementation 
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 
the requirements under this Act;
b) Each cash assistance shall range from Five thousand pesos (Php 5,000.00) 
to Fifty thousand pesos (Php 50,000.00), depending on the number of 
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 demands after the 
mandatory review provided in this Act;
0 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 ”
d) 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
g) Must be willing to state under oath the farts 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


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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 
of the Philippines and to Congress, through the Congressional Oversight Committee 
on Micro, Small and Medium Enterprise Development {COC MSMED) Council
Sec. 11. Appropriations. - The total amount of Ten billion pesos (Php 
0,000,000,000.00) shall be appropriated for the initial implementation of the P3 
Program for microfinance, cash assistance, and capacity building program upon
effectivity of this Act. Thereafter, such sums as may be necessa^ shall be included in 
the annual General Appropriations Act.
Sec, 12. Implementing Rules and Regulations. -Within sixty (60) days from the
approval of this Act, the DTI shall formulate and promulgate rules and regulations 
necessary for its implementation.
Sec. 13. Separability Clause. - If any provision of this Act is declared
unconstitutional, the remainder thereof not otherwise affected shall remain in full force 
and effect.
Sec. 14. Repealing Clause. - All laws, presidential decrees, executive orders 
letters of instruction, proclamations or administrative regulations that are inconsistert 
With the provisions of this Act are hereby repealed, amended, or modified accordingly. 
Sec, 15. Effectivity. -This Act shall take effect after fifteen (15) days following
Its publication in the Official Gazette or in a newspaper of general circulation.
Approved,