NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Second Regular Session
)
SENATE
S.B. No. 2404
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23 AUG 14 AID 59
RECEIVED BV.__
Introduced by SENATOR JOEL VILLANUEVA
AN ACT
PROMOTING ENTREPRENEURSHIP BY ESTABLISHING A 
SUSTAINABLE FINANCING PROGRAM FOR MICRO ENTERPRISES 
THROUGH THE PONDO SA PAGBABAGO AT PAG-ASENSO 
PROGRAM, AND APPROPRIATING FUNDS THEREFOR
EXPLANATORY NOTE
Of the 1,080,810 business enterprises operating in the country in 2021, 99.58% 
are micro, small and medium enterprises (MSMEs). Of these, 978,612 or 90.54% of 
total establishments are micro enterprises. In the same year, MSMEs generated a total 
of 5.46 million jobs, with micro enterprises contributing 32.46% to the country’s total 
employment.1
Even with its vast potential to contribute to generating jobs and reducing poverty 
and inequality, the sector still faces a myriad of issues including low productivity, slow 
growth, and precarious stability.2 According to the World Bank, access to finance is a 
key constraint to the sector’s growth, being the second-most cited obstacle to grow 
small businesses in emerging markets and developing countries.3
To assist micro enterprises by providing an alternative and accessible source of 
financing, the Department of Trade and Industry (DTI), through its financing arm the 
Small Business Corporation (SB Corp.), launched the Pondo sa Pagbabago at Pag- 
asenso (P3) Program in 2017. The program provides accessible and cheap loans with 
minimal requirements to micro enterprises to boost the sector and stabilize informal 
lending, known to many as 5-6 lending. As of 2021, it is available through 467 partner 
microfinance institutions and has already reached more than 220,000 borrowers, with
DTI. 2021 MSME Statistics, https://www.dti.qov.ph/resources/msme-statistics/. Accessed on 09 August 2023. 
Raquiza, M. V. R. (n.d.). Micro, small, and medium enterprise (MSME) sector financing: Issues and 
Challenges. UP CIDS Discussion Paper Series 2021-1. https://cids.up.edu.ph/wp- 
content/uploads/2022/02/UP-CI DS-Discussion-Paper-2021-01.pdf
World Bank. Small and Medium Enterprises (SME) Finance, https://www.worldbank.orq/en/topic/smefinance. 
Accessed on 09 August 2023.


at least P8.7 billion of total amount of loans disbursed.4 Under the 2023 GAA, the 
program has a budget of P750 million.
To ensure the availability and accessibility of microfinancing to millions of micro 
entrepreneurs such as market vendors, sari-sari store owners, and stall owners in 
order to help them sustain and grow their businesses, this measure seeks to 
institutionalize the P3 Program. By assisting the largest sector of MSMEs and helping 
them graduate to bigger enterprises, this bill will contribute to strengthening and 
facilitating the growth and development of the sector towards the creation of more jobs 
and incomes and elimination of poverty in the country.
In view of the foregoing, the passage of this bill is earnestly sought.
JOEI/A/ILLANUEVi
DTI Annual 
Report 2021. 
https://dtiwebfiles.s3.ap-southeast-1.amazonaws.com/e-
librarv/Main+Publications/Annual+Report/DTI+Annual+Report+2021.pdf. Accessed on 18 July 2023.


of tljC ig:’(I etfiqj
NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Second Regular Session
23 AUG 14 All :00
RECEiVED DV;
S.B. No.
SENATE
2404
Introduced by SENATOR JOEL VILLANUEVA
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AN ACT
PROMOTING ENTREPRENEURSHIP BY ESTABLISHING A 
SUSTAINABLE FINANCING PROGRAM FOR MICRO ENTERPRISES 
THROUGH THE PONDO SA PAGBABAGO AT PAG-ASENSO 
PROGRAM, AND APPROPRIATING FUNDS THEREFOR
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
SECTION 1. Short Title.-Th\s Act shall be known as the “Pondo sa Pagbabago 
at Pag-asenso (P3) Act.”
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to 
promote comprehensive national development and free the Filipino people from 
poverty by supporting micro enterprises that facilitate local job creation, production, 
and trade in the country. Towards this end, the State shall encourage entrepreneurial 
activities and develop programs, activities, and projects aimed at helping micro 
enterprises, particularly on access to financing.
SEC. 3. Objectives. - The objectives of this Act are as follows:
(a) 
To provide an affordable, accessible, and simple microfinancing program for the 
country’s micro enterprises:
(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) Fund. -
There is hereby created the Pondo sa Pagbabago at Pag-asenso Fund, hereinafter


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referred to as the “P3 Fund,” which shall be made available to qualified micro 
enterprises under such terms and conditions that will meet the purpose of this Act.
The beneficiaries of the P3 Fund shall be micro enterprises as defined under 
Republic Act No. 6977, otherwise known as the Magna Carta for Micro, Small and 
Medium Enterprises (MSMEs), as amended.
SEC. 5. Lead Implementing Agency. - The Small Business Corporation (SB 
Corp.), the financing arm of the Department of Trade and Industry (DTI), shall be the 
lead implementing agency of this Act. The SB Corp. shall handle the fund delivery to 
micro enterprises through the following modes:
(a) 
Direct lending; and
(b) 
Lending through accredited partner financial institutions (PFIs).
Accredited PFIs shall be limited to rural banks, cooperatives, micro financing 
institutions, or lending companies duly licensed to lend by the Bangko Sentral ng 
Pilipinas (BSP), Cooperative Development Authority (CDA), or the Securities and 
Exchange Commission (SEC), as may be required by law.
To support the administrative and operating expenses of the SB Corp., an amount 
not more than five percent (5%) of the total loans disbursed shall be provided annually 
to the SB Corp., to be sourced from the General Appropriations Act (GAA).
SEC. 6. Features of the P3 Fund. - The P3 Fund shall have the following 
features:
(a) 
The interest rate to be imposed on the loan availed of by the P3 Fund 
beneficiaries shall not exceed two percent (2%) per month;
(b) 
The interest earnings shall accrue to the P3 Fund;
(c) 
There shall be no collateral requirement from theP3 Fund beneficiaries; and
(d) 
The total loanable amount from the P3 Fund shall be set and regularly reviewed 
by the Micro, Small and Medium Enterprise Development (MSMED) Council.
SEC. 7. Policy Oversight Function. - The MSMED Council shall monitor the 
utilization and disbursement of the P3 Fund. It shall submit to the President of the 
Philippines and to Congress, through the Committee on Trade, Commerce and 
Entrepreneurship of the Senate and the Committee on Trade and Industry of the 
House of Representatives, an annual report on the status of the P3 Fund.
SEC. 8. Role of the Department of Labor and Employment (DOLE). - The
DOLE shall engage in labor market interventions that shall provide adequate 
protection and enable the transition of workers in micro enterprises to formal work 
arrangements. It shall also ensure timely and immediate action on job generation and 
other labor concerns in the MSME sector.


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SEC. 9. Appropriations. - The amount necessary to carry out the provisions of 
this Act shall be charged against the appropriations released for the purpose under 
the GAA for the SB Corp. Thereafter, such sums as may be necessary for the 
continued implementation of this Act shall be included in the annual GAA.
SEC. 10. Implementing Rules and Regulations. - Within sixty (60) days from 
the approval of this Act, the SB Corp. and the DTI, in consultation with relevant 
government agencies and other stakeholders, shall formulate and promulgate the 
necessary rules and regulations to implement the provisions of this Act.
SEC. 11. Separability Clause. - If any provision of this Act is declared invalid 
or unconstitutional, the other provisions not affected thereby shall remain in full force 
and effect.
SEC. 12. Repealing Clause.- AW laws, decrees, executive issuances, and rules 
and regulations inconsistent with the provisions of this Act are hereby repealed or 
modified accordingly.
SEC. 13. Effectivity. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,